China's bonds are the worst performers among the so-called BRIC nations (Brazil, Russia, India and China) this month and may remain a poor investment as interest rates increase, according to the manager of the country's best-performing debt fund.

The "bear market may last for several months", said Zeng Gang, who oversees 5.9 billion yuan ($897 million) at Harfor Fund Management Ltd in Shanghai.

Zeng's Huafu Income Growth Bond Fund returned 15 percent last year, the most of some 80 fixed-income funds in China tracked by Bloomberg during the period.

Yuan-denominated government notes have gained 0.3 percent since Jan 31, compared with returns of 2.6 percent for Brazil, 0.8 percent for India and 0.7 percent for Russia, according to data from JPMorgan Chase & Co. China's securities have lost 2.5 percent in the past six months as inflation gathered pace and borrowing costs increased for the first time since 2007, while notes in the other three markets were profitable.

"Inflation expectations remain quite strong, and you can't ignore the rising imported pressure as oil prices surge," said Yuan Xinzhao, a Shanghai-based bond analyst at Guotai Junan Securities Co, the nation's largest brokerage by revenue. "We won't see an obvious decline in bond yields until after June."

The yield on the Chinese government's benchmark 10-year bonds fell seven basis points last week to 3.98 percent, according to data compiled by Bloomberg. It reached 4.14 percent on Feb 14, the highest level since September 2008.

Guotai Junan's Yuan said the 10-year bond yield may rise to 4.2 percent in the coming quarter. Harfor's Zeng said he expects the yield to jump as much as 30 basis points.

"We see a chance that bond yields will stabilize in about three months, but it's hard to say if the probability is high," Zeng said. "More tightening measures may be announced following the authorities' high-profile pledges to fight inflation. The measures may help dampen concern about long-term inflation."

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