The cumulative investment return for QFII funds amounted to 23.11 percent for the past six months, still 2.15 percentage points shy of the figure for domestic equity funds, the report said.

Lipper advised investors that they should keep an eye on local closed-end funds, which are traded at a nearly 24 percent discount to the value of the assets they hold.

The research company recommended that investors hold on to the closed-end funds until they turn out hefty dividends by the first half of next year. Closed-end funds are funds that have a limited number of units and can be traded on the stock exchanges.

Foreign investors should look for funds that invest in China's foreign-currency stock, or B-shares, the report said.

China's B shares, open to both local and foreign investors, are traded at levels more than 60 percent lower than A shares, a valuation that is worth investment, the report said.

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