Posted inNewsChina

NB develops new China A-shares Ucits

Months after it liquidated its previous China onshore Ucits following the departure of the firm's China equities head.

Neuberger Berman (NB) has rolled out a Dublin Ucits fund that invests in China’s onshore equity markets, according to a statement from the firm.

The fund was initially launched in Europe. In Hong Kong and Singapore, only professional investors can subscribe to the fund via the private banking channels, according to a Hong Kong-based spokeswoman of the firm.

This is not the first China A-share Ucits fund that the firm has rolled out, the spokeswoman noted. Previously, the firm had a Ucits fund investing in the asset class, managed by Bin Yu, who joined the firm in 2017 as its Hong Kong- and Shanghai-based head of China equities.

However, the firm decided to close that fund following the departure of Yu from Neuberger Berman.

Yu’s fund, the China A-Share Opportunities Fund, was incepted in July 2018 and was liquidated on 6 December last year, according to the firm’s 2019 report. At time of liquidation, the fund held 51 names and had net assets of around $750,000.

The new fund

Like the previous fund, the new China A-Share Equity Fund will be benchmarked against the MSCI China A (Onshore) Index, according to the statement. It will hold between 30 to 50 stocks and target a tracking error of 4-8%.

The Ucits fund will be managed by the firm’s emerging market equities team, led by Conrad Saldanha. The offering will also be supported by the firm’s Shanghai-based China onshore equities team, the statement said.

In China, the firm has a wholly foreign-owned enterprise (WFOE) that manages at least seven onshore private funds for qualified investors.

Within the China A-share universe, the Ucits fund will focus on investing in high quality domestic companies.

“This strategy lends itself particularly well to China, as the A-share market is inherently volatile and often presents the opportunity to buy these companies at cheap valuations, Ning Meng,” China equity strategy leader at Neuberger Berman, said in the statement.

He also sees opportunities in the “new infrastructure” and real estate sectors.

“Amid the disruption caused by Covid-19 and trade tensions, new government-backed technology infrastructure projects, including artificial intelligence, 5G, industrial internet of things and electric vehicle charging stations are set to be some of the key drivers for long-term economic growth in China,” Meng said.

Meng, who manages the firm’s onshore China A-share strategy in Shanghai, will be acting as an advisor of the Ucits fund, the spokeswoman noted.

Besides the Shanghai team, the emerging markets equities team will be assisted by the firm’s Taiwan- and Hong Kong-based equity research teams, according to the statement. It will also work alongside Neuberger Berman’s global ESG team to review the ESG scoring of its portfolio holdings on a regular basis.

Part of the Mark Allen Group.