HEAD-TO-HEAD: JP Morgan versus UBS

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Luke Ng, FE Fundinfo

Introduction

China’s stock and bond markets have faced severe headwinds this year. The Sino-US trade dispute has unnerved investor sentiment and depressed corporate earnings in some sectors that were already under pressure from a slowing domestic economy.

However, there have also been countervailing forces that have buoyed markets, and encouraged foreign portfolio flows – despite a weakening renminbi since the late summer.

Perhaps in response to the closure of key export markets and amid US isolationist rhetoric, China’s policy makers have accelerated the opening of the country to overseas investors and fund managers, for instance through allowing foreign majority ownership of joint-venture asset management and securities firms.

Meanwhile, inclusion of China A-shares and, most recently, China government bonds into leading international benchmark indices has forced passive international funds to raise their allocations to China securities and induced active funds to increase their exposure too.

In this environment, it is likely that more global managers might plan to launch China equity and bond funds. Alternatively, they might look to combine the two asset classes with a mixture of equities and bonds.

FSA asked Luke Ng, senior vice president and head of Asia research at FE Fundinfo, to compare two existing China mixed asset products: the JP Morgan China Income Fund and the UBS Key Selection China Allocation Opportunity Fund.

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