The JB China Evolution Fund will invest in what the company describes as China’s “new economy” – an economy being driven by regulatory reform which in turn is creating growth in sectors such as technology, healthcare, environmental protection and the broad consumer space.
Swiss & Global said China’s planned reforms, aimed at shifting the economy to a market driven one, rather than one driven by credit, will help it to become the world’s second largest consumer market by 2015 (based on data published by China’s National Population and Family Planning Commission in July 2010).
The new fund’s manager, Jian Shi Cortesi, who already manages the China portfolio of the JB Asia Focus Fund, said the fund plans to tap into this new growth story and evolving economy.
“China’s credit-driven economic growth model is unsustainable, but the world’s second largest economy is evolving as it moves away from an overreliance on investment towards increased consumption,” said Shi Cortesi.
“The new reform packages presented at China’s third plenum meeting, in November 2013, included 60 initiatives which to be implemented over the next 10 years. This ambitious plan will enable China to embark on a new growth path through promoting a market driven economy, supporting private businesses, boosting consumption and deepening the urbanisation process.”
'Undiscovered companies'
Highlighting the new approach taken by the fund, Swiss & Global points to the MSCI China Index (five year performance below) – a benchmark for many existing China strategies – which the company said has an overrepresentation of China’s “old economy”, with 70% of its constituents comprising telecommunications, energy and financial companies.
Swiss & Global asserts many of these companies are “mature, state owned and slow-growing industries with significant policy headwinds” and are also well covered by regional analysts.
The JB China Evolution Fund meanwhile, will focus on “new economy” sectors, investing 70% of its 30-50 stock strong portfolio in fast-growing industries benefiting from China’s reform policies, using the MSCI China ND Index as its benchmark.
"The launch of this fund will allow investors to participate in investment opportunities created by the economic transition of China,” added Shi Cortesi. “Our existing in-house sector expertise in China’s new economy will help to identify undiscovered companies poised to start a strong earnings cycle.”
The Ucits IV structured fund is part of Swiss & Global’s Luxembourg domiciled Sicav. Its base currency is US dollar and it has an annual management fee of 1.5%.
