Posted inNews

Schroders readies ‘all China’ product in HK

The strategy seeks investments in specific China stocks, regardless if the companies are listed onshore or offshore.

Schroders has received a greenlight from Hong Kong’s Securities and Futures Commission to launch the Schroder ISF All China Equity Fund, according to the regulator’s records.

The Sicav fund was first launched in Luxembourg in June last year, according to data from FE Analytics. The fund is also registered across Europe, according to the firm.

Schroders already manages other China-focused equity strategies. In Hong Kong, for example, it has the SAR-domiciled China Equity Alpha Fund and two Sicav funds, which are the Schroder ISF China Opportunities Fund and the ISF Greater China Fund.

Stephen Kam, co-head of product management for Asia ex-Japan equities, explained that the All China Equity Fund will ignore where the stocks are traded (either offshore or onshore) and invest in what the firm believes are the best opportunities in the listed Chinese equity space.

Currently, the portfolio has 60% of its assets in offshore Chinese equities and 40% in onshore Chinese equities.

The product also focuses on “high quality businesses” in China, he added. He did not provide further details of the strategy.

According to the fund factsheet, the top two holdings are Tencent and Alibaba, which together account for 12% of the portfolio.

“The All China Equity was designed as a differentiated offering, providing investors with greater exposure to China A-shares relative to our offshore-focused products,” Kam said. He did not say whether the firm will be launching the new product in other Asia markets.

The firm’s other China offerings are different, he said. Both the China Opportunities and the Greater China funds invest at least 70% of its assets in offshore China equities, according to their fund factsheets. On the flipside, the China Equity Alpha Fund invests only in securities listed on the Shenzhen and Shanghai Stock Exchanges.

Both the offshore and onshore Chinese equity markets have key differences in performance, according to data from FE Analytics.

Offshore vs onshore yearly performance

Index 2019 YTD 2018 2017 2016 2015 2014
CSI China Securities 300 (onshore index) 32.58 -27.57 32.6 -15.21 2.43 52.08
MSCI China (offshore index) 20.53 -18.75 54.33 1.11 -7.62 8.26
Source: FE Analytics


The Schroder ISF All China Equity Fund since its launch vs the China and Greater China sectors 

Source: FE. In US dollars. The fund has no specified benchmark.

Part of the Mark Allen Group.