China’s 13th Five-Year Plan, covering 2016-2020, won’t be revealed in full until March 2016. But Ng said that the BlackRock co-portfolio managers Andrew Swan and Helen Zhu have acted on President Xi Jinping’s resolve to push through banking, social security and rural land reforms. The team has started shifting the fund’s portfolio to accommodate more banking, insurance and real estate equities.
“The BlackRock fund focuses on sectors that are expected to benefit from Chinese reforms over the next five years. While Swan and Zhu take China’s 13th Five-Year Plan as a guideline, it does not mean that the fund is biased against any sector,” Ng said.
Ng noted that the fund adopts a flexible approach and seeks to capture companies that benefit from cyclical uptrends. The managers favour a high-conviction approach and the fund’s relatively concentrated number of holdings demonstrates this. In addition, cash and cash equivalents of 2.2% are maintained in the fund to allow for maximum flexibility.
Turning to the Allianz fund, portfolio manager Christina Chung uses a growth-oriented process. She aims to identify companies that can increase shareholder value over the long-term. Ng noted that while Chung favours the growth-oriented process, she will from time-to-time shift her allocations to capture pricing inconsistencies on a short-term basis.
A snapshot of portfolio allocation:
| BlackRock fund | Allianz fund | |
| Launch | 24 June, 2008 | 3 October, 2008 |
| AUM | $1.67bn | $233mn |
| Number of holdings | 47 | 33 |
| Top sectors |
Financials – 44.0% Information technology – 12.21% Telecommunications – 8.81% Utilities – 6.05% Materials – 5.73% |
Financials – 45.1% Infomation technology – 12.4% Telecommunications – 8.8% Utilities – 6.7% Energy – 6.2%
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Top holdings |
Tencent Holdings – 8.92% China Construction Bank – 7.86% China Mobile – 6.69% Bank of China – 5.85% Ping An Insurance Group – 5.39% |
Tencent Holdings – 8.32% China Mobile – 7.03% Bank of China – 6.45% Ping An Insurance Group – 5.58% China Life Insurance – 5.32%
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Source: BlackRock, Allianz
