Manager review
Anthony Wong, who has been with the firm since 2012, started managing the Allianz fund in January 2014. Sunny Chung was designated as a deputy manager for the fund in May this year.
Allianz has a five-person Greater China equity team, which also gets support from researchers focused on Asia-Pacific.
Grassroots Research, a division within Allianz that uses a global network of journalists and industry contacts to help the firm identify stock and sector trends, is another resource for the fund manager, Ng said.
In regards to the JP Morgan fund, Lilian Leung and Song Shen have been managing the product from June 2011. Both joined the firm’s Greater China team in 2010.
The firm also has a Greater China reserach team with eight analysts mainly covering China, according to Ng.
“The Greater China research team covers primarily individual stock analysis including company due diligence and research, and each research manager/analyst is dedicated to cover around 30 stocks across different markets and sectors in the region,” said Ng.
As mentioned previously, Leung also has access to the researchers at CIFM, JP Morgan’s Chinese joint venture partner.
Fees
The Allianz fund charges higher annual management fees and has a higher total expense ratio (TER) than the JP Morgan product.
The Allianz fund charges 2.25% annual management fee compared to the 1.75% charged by the JP Morgan product.
The TER for the Allianz fund was 2.31% for the year ended 30 June 2014 compared to the JP Morgan fund’s TER of 1.81% for the year ended 30 September 2014.
“Fees of the Allianz fund are in the upper range among China A-share active funds in the SFC-registered fund universe,” said Ng.
Conclusion
The FE Crown Ratings of the two funds are very close: the Allianz fund is rated 5 Crowns and the JP Morgan vehicle gets 4 Crowns. (The FE Crown Rating ranks funds based on alpha, consistency and volatility).
Since both funds focus on mid- and large-cap stocks, they have a degree of stability when the A-share market turns volatile.
However, the Allianz fund could benefit in the short-term while the JP Morgan vehicle has better potential in the medium-term, said Ng.
“The Allianz fund is small in size and it offers higher flexibility for fund manager to restructure the portfolio during volatile market periods when he sees fit. This can help in better short-term performance.
“The JP Morgan team is focussing on themes, which could benefit from easing monetary policy, reform in state-owned enterprises and structural growth. This can benefit the fund in the medium-term.”
However, exposure to any fund that invests in China’s onshore markets should not be excessive, Ng said, as the A-share market is dominated by mainland retail investors.
“These two vehicles can be used to diversify risk in a global equity fund portfolio as the correlation of China A-shares versus other major equity markets is fairly low.”
