Key points
- Set to capitalise on the forthcoming domestic and foreign inflows into Chinese equities.
- High-conviction approach based on finding quality growth companies.
- Strict risk-management performed by an in-house, Geneva-based risk-management team.
- A highly experienced on-the-ground investment team in Shanghai, led by CIO Chen Hong, a leading figure in the Chinese asset management industry.
- One of the longest track records in China, with similar strategies run by the team outperforming in 10 out of the last 12 years
Investment case
With an ageing population and an inefficient pension system, China faces some serious future funding challenges. Part of the government’s response has been to promote direct investment in equities.
For example, it recently unveiled its Ownership Reform Plan, which is designed to improve corporate governance and increase companies’ focus on maximising shareholder value with the ultimate aim of encouraging more domestic investors to allocate to their home stock market.
It has also put in place initiatives to boost foreign investment. For instance, the Shanghai- Hong Kong and Shenzhen-Hong Kong market links will make it much easier for foreign investors to buy Chinese equities. And by ensuring daily liquidity, this programme could result in global indices significantly increasing their positions in China. In short, we expect more and more investors to allocate to Chinese equities in the months and years ahead.
Fund concept
The combination of a large pool of opportunities – there are over 3,000 listed companies in China – and the inefficiencies in the market – it is driven by retail investors, and there is limited availability of ETFs and derivatives – means there is considerable scope for institutional investors to outperform the broad market.
With this in mind, our team focuses on finding quality growth companies, only investing in its strongest convictions, with the aim of outperforming the MSCI China A index by 300 basis points a year. As the Chinese stock market remains less mature than those in the developed world, in-depth analysis and strict risk-management are vital to help us achieve this goal.
