Manager review
Blackrock’s fund “has seen more portfolio manager changes than we would like,” Share said.
It is now co-managed by Andrew Swan and Helen Zhu, who started in June 2013 and July 2014 respectively.
Zhu has 17 years of industry experience, but had no portfolio management experience before joining Blackrock, Share added. Zhu spent eight years at Goldman Sachs in Hong Kong, most recently as their chief China strategist.
Zhu is supported by eight China-focused analysts with six years of experience and two years of tenure on average. The team’s depth and tenure is considered “less favorable to some of our preferred teams in the category.”
Swan, meanwhile, “spends most of his time running regional mandates”, Share said.
For the GAM fund, portfolio manager Michael Lai has run the fund since the launch in July 2007, which Share said shows management stability.
In addition, “theme selection is highly dependent on Lai’s ability to consistently stay one step ahead of the market and, while we note key-person risks, we take comfort that he has steadily applied his investment ethos since the fund’s launch and has delivered impressive returns through the market cycles”.
Lai is supported by four investment managers with 14 years of investment experience on average. The team has been stable, despite the relatively small size compared to its competitors, Share said.
Fees
The latest ongoing charges (OCF) of the Blackrock product (Class A2) are 1.83%, as of January 2016.
The OCF of GAM fund is lower at 1.52% as of March this year.
Both are lower than Morningstar’s China equity category median charge of 1.92%.
Conclusion
Share said she recommends the GAM fund, given the stable management team and long track record.
“The Blackrock fund actually performed very well this year. But we don’t only look at performance.”
Still, “the GAM portfolio could be risky, and is more suitable for investors who are more risk tolerant and with a more aggressive risk profile.”
The Blackrock fund investments have a lower risk profile than the GAM fund, for instance, the exposure to large banks, which should prove more suitable to investors who prefer to have lower risk exposure to China equities, she said.
