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Blackrock launches AI-driven China fund

Blackrock has launched a China A-Share Opportunities Fund that uses machine learning, big data and artificial intelligence to invest in equities through the Stock Connect programme.
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The fund is a long-only, systematic active equity (SAE) Ucits strategy “targeting consistent alpha on an annual basis”.

The firm said the fund has been designed for investors seeking growth, alpha and diversification in the Chinese market.

The investment process uses a combination of traditional quantitative signals, big data and machine learning to identify about 300 companies for investment.

Companies will be selected from the 1,300 Chinese companies in the Shanghai, Shenzhen and Hong Kong Exchange Stock Connect programme.

Leading the portfolio management team will be Jeff Shenco-chief investment officer of active equity and co-head of investments within SAE. He will be supported by Rui Zhao, co-portfolio manager on the fund.

Shen said: “We’ve been applying systematic investment methods to equity markets for over 30 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.”

Michael Gruener, head of EMEA retail at Blackrock, said exposure to Chinese companies has been minimal.

“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 China A-Share fund will be managed by the SAE team in San Francisco and trading will be executed in Hong Kong. The team will consist of more than 80 investment professionals across research, portfolio management and investment strategy.

Part of the Mark Allen Group.