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Defaqto on Fidelity China Consumer Fund

View of Defaqto insight analyst for funds Fraser Donaldson

Donaldson says: “This fund aims to achieve long-term capital growth through investing primarily in the equity securities of companies that have their head office in China or Hong Kong, or exercising a predominant part of their activities in those areas. These companies are involved in the development, manufacture or sales of goods or services to consumers in China.

The fund was originally launched offshore on February 23, 2011 and due to investor demand, it has now been launched in the UK. Investor appetite for this region can clearly be seen from the recent IMA sales statistics for July. These show the Asia Pacific ex Japan was the fourth best selling sector, with the highest net sales since December 2010.

The fund manager, Raymond Ma, runs the fund from Fidelity’s Hong Kong office so is well placed to identify the trends that are influencing the Chinese consumer market. Ma has access to seven China analysts and 28 country and regional analysts to provide his investment ideas. He will typically maintain the portfolio with between 80 to 120 companies and will look to invest in companies that have a market capitalisation in excess of $500m. He will focus on those with strong balance sheets and good levels of free cash flow. 

This fund may be too specialised for some, but there is no doubt that for those looking to pick up on a growing trend, the growth in Chinese consumerism is worth considering. China may well continue to post single-digit GDP growth despite the concerns over rising inflation.

For investors and advisers that are less familiar with the Chinese market, but feel they should participate may feel that exposure to China is better achieved through an emerging economy Bric – Brazil, Russia, India, China – fund, or within a more established Asia Pacific ex Japan fund, leaving the asset allocation in these emerging economies to the fund manager.”

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