Aim: Growth by investing in Chinese equities
Minimum investment: Lump sum £1,000, monthly £50
Investment split: 100% in Chinese equities
Isa link: Yes
Charges: Initial 5%, annual 1.5%
Commission: Initial up to 3%, renewal 0.5%
Tel: 0845 6025016
Martin Currie’s China fund gives UK retail investors access to the firm’s China team for the first time. The fund will hold 40 to 60 Chinese stocks of any size and is benchmarked against the MSCI Zhong Hua index. It is managed by Martin Currie director James Chong, who has 15 years’ investment experience, and a team of nine Shanghai-based analysts. It will also draw on the resources of the Martin Currie’s Edinburgh-based Asian team.
The fund will look for good quality companies that have strong growth potential. Chong and his team will focus on situations where changes are expected to have a positive effect on companies and drive returns.
Putting the fund in to its market context, Chelsea Financial Services managing director Darius McDermott says: “For an investment house to now declare their running in China would be to invite accusations of bandwagon jumping. This is a charge that cannot be levelled at Martin Currie.”
McDermott points out that the firm, which launched its first China equity fund in 1997, has 12 years’ experience in Chinese domestic markets and a strong track record of launching successful products in the region; He says: “Around 25 per cent of its assets are invested in Chinese equities. The group was awarded as Qualified Foreign Institutional Investors in 2005 – a first for a UK asset manager.”
Discussing the merits of investing in China and the factors that may be a cause for concern, McDermott says: “I continue to be concerned about China valuations in the short term and cannot see a repeat of 2009’s stellar performance in the region. Medium-to-long-term concerns are the move to more protectionist measures that favour homegrown industries, an inflating real restate bubble, complaints of currency manipulations and the spectre of government censorship.
“Yet all things considered, I believe there is an overwhelming case for investment. The shift from West to East is undeniable and I believe foreign investment and a growing middle class will continue to power growth.”
McDermott thinks there is obvious competition for this fund, such as the First State Greater China growth fund. “However, Martin Currie will boast experience. The fund manager, James Chong, is a high quality, proven multi-cap manager who already runs the successful Martin Currie Greater China fund, a Sicav. He can draw on a big well-resourced bank of analysts based in Shanghai.”
McDermott believes Martin Currie’s position as a big investor in the region is also a big plus, affording Chong unique access to company management and allowing him to expand the team. He also thinks that as Chong is a native to the region, this is another positive. “The fund’s charges, including an annual management charge of 1.5 per cent, are in line with the competition,” says McDermott.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average