Schroders has launched a new fund that invests in onshore China A-shares through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.
The Schroder ISF China A-Share fund will pick from the China A-shares stocks that represent a universe of over 3,500 companies with low correlation to other equity markets.
The Schroders’ Asian Equities team, with Jack Lee, lead investment manager and head of China A-Share Research, will manage the fund and focus on small to mid cap stocks with a quality bias and apply an active, bottom-up approach to explore best opportunities, the company said.
“In my 19 years of investing in China, the opening of the ‘Stock Connect’ is providing one of the best opportunities for investment in what is an often a misunderstood market,” said Lee
“Through our investment lens, we are able to identify exciting opportunities in the dynamic mid to small cap space, particularly within the fast-growing sectors such as technology, healthcare and the consumption space.
“It is in the mid to mid cap space that the onshore China market features many compelling companies that demonstrate a combination of strong management and product/service leadership in the fastest growing (soon to be the largest) internal marketplace in the world.”
John Troiano, global head of distribution at Schroders called the opening of the China A-share market as “huge opportunity” for the company’s international clients.
“We believe that this active, bottom-up approach will provide investors a strong source of growth, through one of the fastest growing markets in the world; and portfolio diversification, through an equity market that is largely underrepresented in global portfolios and has low correlation to other markets,” Troiano said.
In its May 2018 edition, International Investment’s sister title InvestmentEurope explored the China A-Shares theme from the perspective of fund managers and selectors.