BlackRock has launched a new China A-Share fund, aimed at those who want exposure to the Chinese domestic market.
The fund - BlackRock Global Funds China A-Shares Opportunities - will invest in around 300 companies from the Shanghai, Shenzen and Hong Kong Exchange Stock Connect Programme, which gives foreign investors access to Chinese mainland shares.
Michael Gruener, head of EMEA retail at BlackRock, said foreign investors had had very little chance to buy into Chinese stocks.
"China is one of the largest stock markets in the world, but due to restrictions on ownership, foreign investors have had very little exposure to Chinese domestic equities," he said.
"Now, with access to onshore Chinese companies through the recently opened Stock Connect programme, investors have the opportunity to invest in a previously untapped market.”
The fund, which is a long only fund, will be managed the Systematic Active Equity (SAE) team in San Francisco, led by Dr Jeff Shen, PhD, co-chief investment officer of active equity and co-head of investments within SAE, He is supported by Dr Rui Zhao, PhD, who is co-portfolio manager on the fund.
Dr Shen said: “We've been applying systematic investment methods to equity markets for over thirty years and more recently, we’ve been researching and applying new methods - big data, machine learning and artificial intelligence – to our models.
"We find these insights have extraordinary relevance in a market like China where data is quite often available and the market is large and complex. We have been managing this strategy for institutional investors for five years, and we are very excited to offer this strategy to retail investors in a vehicle that provides daily liquidity.”
However, Minesh Patel, from EA Financial Advisers in London, said he was wary of funds that offer access to single markets, particularly China.
“The market is very volatile, because it is mainly used by individual investors rather than institutions and it can be driven by sentiment,” he said. “Investors should expect a bumpy ride.” He said he would only use a fund like this as a satellite fund rather than a main option.
