Aberdeen Standard Investments (ASI) is to next month launch a China A-share equity fund for UK investors, saying its targeted approach taps into a "vast" iinvestment opportunity.
The planned ASI China A-Share Equity Fund aims to generate growth over the long term (five years or more) by investing in onshore Chinese companies with an A-share listing.
The business said the China A share equity market provides a "vast investment opportunity", with more than 3,500 listed companies across several sectors. It also said growing foreign participation "should help improve corporate-governance standards, while the A shares market is less correlated to global markets and is predicted to have strong earnings growth compared to global peers".
ASI, which pointed out that it has been investing in China since the early 1990s, also said the fund’s portfolio will mirror that of the Luxembourg-domiciled Aberdeen Standard Sicav I China A Share Equity Fund, which has grown to $2.6 billion (£2.1bn) in assets since its launch in 2015. The new fund will be managed by the same 24-strong team, based in Hong Kong, Shanghai and Singapore.
Nicholas Yeo, head of equities for China at ASI, said: “China is the world’s second-largest economy, one that is set to overtake that of the US within a generation. It has created wealth and enriched its people in an unprecedented manner.
“Investing in A-shares is one way of accessing the kind of companies that form the backbone of that growth and Chinese authorities are actively encouraging foreign investment. But investing is not without its challenges. Corporate governance standards are improving but still relatively low and the A-shares market can be extremely volatile. The approach we’ve taken to these challenges is to focus on company fundamentals and not simply buy into the generic trend of China’s growth, and this has really paid off in recent years.”
Alex Hoctor-Duncan, global head of sales at ASI, also commented. “The launch of the fund will allow UK-based investors to access a relatively young, exciting market, which has seen increased exposure within mainstream global indices. China A-shares are certainly not for the faint-hearted - but from a long-term perspective, in our view they could offer attractive opportunities.”