Ashmore has launched a trio of Sicav structured funds with exposure to local markets in China, which it claimed was previously “inaccessible” to foreign investors.
The London-based emerging market specialist’s three Luxembourg-domiciled Sicav funds include a debt fund, an equity fund, and a multi-strategy fund.
The Ashmore Chinese Debt Fund offers exposure to Chinese debt securities issued by sovereigns, quasi sovereigns and public and private sector corporates denominated in renminbi and traded on the China interbank bond market and/or the China exchange traded bond market.
The equity fund, meanwhile, will invest in Chinese A-shares listed on the Shanghai and/or Shenzhen stock exchanges, while the multi-strategy fund will seek to generate returns by adopting a balanced approach based on the debt and equity strategies of the other funds.
The funds will take advantage of Ashmore’s recently-acquired RMB Qualified Foreign Institutional Investors status by Chinese regulators, which it received in January and enables foreign managers to access the mainland Chinese market.
Ashmore became the first manager outside of Greater China to receive this status by the China Securities Regulatory Commission.
Christoph Hofmann, global head of distribution at Ashmore, said: “China is not only the world’s second largest economy, it is also one of the most difficult to access, with local markets having been largely inaccessible to foreign investors.
“The launch of these funds changes this dramatically. Investors now have unparalleled access to local Chinese securities and these funds provide investors the opportunity to invest in one of the most dynamic markets in the world.”
According to Ashmore, the launch of these funds was facilitated by its “close relationship” with Northern Trust, who provides fund administration in Luxembourg, and HSBC, who will act as the onshore sub custodian.
Provider view: Jan Dehn, head of research at Ashmore, said: “China is in the midst of a storming change as it transforms itself from an export to a domestic-led economy. We believe China’s aggressive appetite for reform and forward-looking policies will place the country in a very strong position to grow in the future. We think the transformation of the Chinese economy will be especially positive for the domestic bond market, which will play a central role in macroeconomic policy. China’s domestic bond market is one of the largest in the world and is set to become increasingly accessible to investors outside of China.”
Adviser view: Adviser view: Robert Lockie, investment manager and branch principal for Bloomsbury Financial Planning, said: “China is already represented in emerging market indices, so is likely to feature in most portfolios anyway. Single country funds are generally for those investors who think that they are competent to make the calls as to what weighting to have to specific sectors of the global economy and who expect to change that view over time, to an extent that would not be reflected in a multi-country fund. We do not think that we have that competence and we are not sure that anyone knows how to pick, in advance, those who do; consequently we avoid single country funds other than for UK investors requiring a bias to their home market.”
Charges: The UK RDR share class annual management charges are: 1.15 per cent for the fixed income fund, 1.5 per cent for the equity fund and 1.5 per cent for the multi-strategy fund. For other retail investors, the fees are between 1.75 per cent and 1.95 per cent.
Verdict: Whatever your thoughts are on Chinese equities, the opportunity to gain greater exposure to such an important market as part of a diversified portfolio must be seen as a good thing. In the past three months up to 12 August, the MSCI China index delivered decent returns of 17.5 per cent, which some analysts have attributed to a combination of cheap stocks and stabilising growth. However, others fear a potential banking crisis is just around the corner and that recent positive data has just papered over the cracks of a vulnerable economy.
