BEIJING -- Qualified Domestic Institutional Investors funds posted surging profits during the third quarter of the year, sweeping aside grim investor sentiment that resulted from huge losses in the April-June period.

China's QDII funds saw their profits jumping to 3.51 billion yuan ($557.05 million) in the third quarter, representing a substantial rise from the 4.08-billion-yuan loss seen in the previous quarter, data from TX Investment Consulting showed.

Wang Guangguo, a senior analyst with Haitong Securities, attributed the funds' improved performance to easing monetary policies in the US and European markets and the economic bailout programs initiated by Western governments.

The performance of QDII funds in the second quarter was mainly dragged down by the deepening European debt crisis and US economic uncertainties, analysts said.

They also predicted that QDII fund returns may fall in the last three months of the year due to slowing global economic growth weighed down by the ongoing European debt crisis and the sluggish global demand.

China launched the QDII scheme in 2006 to allow domestic funds to be invested abroad in order to slow the build-up of the country's ballooning foreign exchange reserves and ease appreciation pressure for the yuan, the Chinese currency.