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Morgan Stanley’s Pioneer of China Investing Falls on Hard Times

  • Fund discount to assets widest among closed-end funds in U.S.
  • Underperformance grew amid investor exodus from China
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As bad as the Chinese stock market has been for investors this year, a Morgan Stanley fund has been even worse.

The nine-year-old Morgan Stanley China A Share Fund, the first U.S. closed-end fund to invest in mainland stocks, has slumped 13 percent this year through Sept. 18 on a total return basis, compared with a 6.2 percent decline in the benchmark it tracks. The underperformance came as investors sold the fund, pushing it to trade at 24 percent below the value of the assets it holds, the biggest discount among more than 500 closed-end funds on American exchanges, according to data compiled by Bloomberg.