M&G Investments today (9 September) launched the M&G China Fund to provide investors with “access to one of the world’s most compelling markets for long term stock picking”.
The launch coincides with Chinese equity valuations reaching all-time lows whilst companies increasingly focus on boosting shareholder returns.
The M&G China Fund will be managed by David Perrett who has spent more than three decades investing in China and the wider region. He will be supported by Singapore-based deputy fund manager, Jamie Zhou and the wider Asia Pacific equity investment team which manages circa $23 billion in assets across the region.
The M&G China Fund’s investment approach will centre on a universe of circa 300 Chinese stocks, which have been curated following more than 30 years of rigorous coverage and investment research. With a strong focus on risk pricing, the team’s high conviction, bottom-up stock picking approach will leverage its extensive knowledge and network of companies and contacts in the region.
“In our view, China’s stock market capitalisation is currently disproportionately small compared to the size of its economy, with many stocks trading at compelling levels of valuation. At the same time, many Chinese companies are showing improving operational resilience during recent tough times and are increasingly focused on maximising profits and boosting shareholder returns through both higher dividends and share buy-backs,” says David Perrett, manager of the M&G China Fund and co-head of the Asia Pacific equity investment team.
“In addition to ongoing corporate self-help, many Chinese businesses are also leaders in globally growing areas such as renewable energy and digital supply chain-management. We believe our bottom-up stock picking approach, combined with rigorous risk management should enable us to deliver consistent and attractive returns for our investors.”
The team manages sizable mandates investing in Asian and Japanese equities on behalf of M&G Life’s £129 billion With Profits Fund, as it sought to further diversify its geographical allocation. In 2021, they were awarded a mandate to invest in Chinese equities that has grown to $1.14bn. The launch of this Fund is part of M&G’s strategy to make its investment capabilities more widely available to external investors, with a focus on the UK Wealth Management sector as they seek to increasing allocate more globally.
Fabiana Fedeli, CIO, equities, multi asset & sustainability at M&G Investments, added: “Active management is essential for investors who want to capture the long-term growth potential of China, whilst avoiding the pitfalls and volatility of the market. We are delighted to launch the M&G China Fund and provide our investors with this opportunity, led by a team with decades of experience in the region.”
Available to UK investors as a daily dealing fund, the M&G China Fund will aim to provide a higher total return (capital growth plus income) net of OCF than that of the MSCI China with 100% China A Share Index over any five[1]year period. Typically holding between 50-80 stocks, its focus will be on quality companies with strong balance sheets, sustainable cash flows and attractive valuations.
M&G’s Asia Pacific Equities investment team of 13 is led by David Perrett and Carl Vine who manage circa $23bn in assets across various strategies investing in Asia ex Japan, Japan, China and India, and using a bottom up stock selection-led process.
