Wealth managers' four Asian funds to thrive in Year of the Snake

11 Feb 2013 | 15:05
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As China enters the Year of the Snake - associated with wisdom, as well as luck with finances - wealth managers reveal their top fund choices in a region which can move quickly against investors.

Over the last 12 months, some Chinese shares have had a fairly torrid time, with the country's A share index declining sharply in the last quarter of 2012.

Although it has since recovered, the falls - caused by fear over a slowdown in the world's second largest economy - eroded much of the last 12 months' gains.

The B-share index fared better, gaining around 25%, while the Hong Kong Hang Seng has risen around 10%.

Now, with the new leader of the ruling Chinese Communist party in place, and signs the country is willing to ease policy to help boost growth, investors are turning bullish once again.

But which funds are well placed to benefit from a sustained rally in equity markets?

Below, wealth managers name their top picks to gain exposure to China and those regions benefiting from growth in the country.

Schroder Asian Alpha Plus

The £448m  fund - run by Matthew Dobbs - is Bestinvest's top pick for 2013. Although not a straight play on China (the fund has large positions in Hong Kong and Australia, among others), Bestinvest favours it because of its varied approach.

Ben Seager-Scott, senior research analyst at Bestinvest, said: "While the fund has significant exposure to China, which dominates the region, the manager can also add value through positions in other countries in the region where the economic conditions may be more favourable."

He added given the more varied approach the fund takes, it can help to mitigate some of the volatility associated with investing in China alone.

The fund returned 20.8% in the year to 1 February, versus the IMA Asia Pacific ex Japan sector average of 14.7%, and versus the 15% return from the IMA China/Greater China sector.

Jupiter China

Philip Ehrmann's portfolio is one of Hargreaves Lansdown's key plays in the region, and has outperformed the wider IMA China universe, delivering 17.2%.

Adrian Lowcock, investment manager at Hargreaves, said Ehrmann's bias to small- and mid-cap companies should give it a lift if the economy takes off.

"Ehrmann favours consumer stocks, especially retailers, as he expects them to benefit from rising disposable incomes," he said.

The manager also holds a lot of names in the technology and biotech sectors, as well as other stocks geared towards change through ongoing economic and social reform.

"This fund is certainly a more volatile investment which has shown some potential to outperform a rising market, but as such it will suffer in falling markets," he said.

"I would not recommend a pure China fund as a core investment, but for someone wanting to add a little risk to their emerging market exposure, this fund should do well in a rising market."

This article continues....

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Categories: Equities

Topics: ChinaEquitiesSchrodersJupiter

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