Aberdeen Standard Investments (ASI) is launching a China A-Share Equity Fund. It will be available to UK investors in August subject to regulatory approval.
The ASI China A-Share Equity Fund will look to generate long term growth over a period of five years or more by investing in onshore Chinese companies with an A-share listing. The new fund is managed by a team of 24 people and will be based in Hong Kong, Shanghai and Singapore. The team will base its investment decisions on fundamental research and an active approach, which utilises ESG assessment and corporate engagement to enhance returns.
ASI believes that this active approach has helped the strategy achieve significant outperformance against the benchmark since inception. The asset manager also argues that the China A share equity market represents a vast investment opportunity, as it has over 3,500 listed companies across a broad range of sectors. The A shares market is also less correlated to global markets, and is predicted to have strong earnings growth compared to rival markets worldwide.
ASI has been investing in China since the early 1990s and the fund’s portfolio will mirror the Luxembourg-domiciled Aberdeen Standard SICAV I China A Share Equity Fund, which has grown to $2.6 billion in assets since its launch in 2015. At its launch, an I share class will be available with an annual management charge of 1 percent, alongside a minimum investment requirement of £1 million.
Nicholas Yeo, Head of Equities – China at Aberdeen Standard Investments, believed that although investing in China can be challenging but that the fund would provide valuable opportunities to investors.
He said: “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 Aberdeen Standard Investments, reiterated the potential volatility of China A-shares, but argued that the new fund would appeal to the more intrepid investor.
He said: “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.”
