First State Investments has launched a UCITS version of its China A-shares strategy to meet growing European demand for companies from mainland China, listed on the Shanghai and Shenzhen stock exchanges.
The First State China A Shares fund will be a sub-fund of its Dublin-domiciled UCITS structure, and will be managed by the First State Stewart Asia team, led by portfolio manager Quanqiang Xian who is based in Hong Kong.
He said: "Ten years ago we were one of the first companies to receive a quota approval under the Qualified Foreign Institutional Investor programme.
"With the launch of this new fund we remain focused on investing in companies with good governance and proven capabilities, as well as looking for evidence of increasing ESG standards and rising cash flows.
"We believe that such companies should provide satisfactory financial returns at lower volatilities for investors over the medium to long term."
The team has managed money in the region for more than ten years, with assets under management of $533m in its current China A-shares strategy and $4,476m in its Greater China strategies.
First State's existing strategy, launched in 2009, is an alternative investment fund and as such is not compliant with the UCITS framework.
Taking a bottom-up approach to stockpicking, the fund will seek to invest in high-quality companies with well-governed management teams and strong and stable franchises. The team will also maintain its integrated focus on ensuring environmental, social and governance (ESG) criteria are met.
Michael Stapleton, managing partner, First State Stewart Asia said: "The launch of the First State China A Shares fund reflects investor demand for a UCITS product with access to an equity market that is still relatively untapped and underrepresented in investor portfolios.
"The China A-shares market is complex to navigate; we believe that our detailed company analysis through our active, bottom-up investment approach, together with our experience of investing in China, will provide European investors with a good way of accessing this developing market."