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Tailored for investment professionals this site provides information on our products, strategies and services. Please remember capital is at risk and past performance is not a guide to the future.

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Accessing China

Rapid reform in the Chinese investment markets over the past few years has provided an opportunity for international investors to participate through local investment in this dynamic economy undergoing structural change at attractive valuations.

  • Accessing the opportunity

    The importance of our ‘All China’ approach


    We believe it is crucial to take an ‘All China’ approach to investing in China that combines access to both mainland and offshore markets. This offers the broadest opportunity set and allows our portfolio managers to allocate dynamically between the two markets as valuations evolve.

    Mainland China refers to the onshore equity and bond markets. Investment into these markets has been heavily restricted to foreign investors in recent years, however Investec Asset Management are at the forefront of recent market liberalisation which now enables our portfolio managers to invest via three mechanisms.

    Renminbi Qualified Foreign Institutional Investor (RQFII)

    • Allows Investec Asset Management to have open access to all mainland China securities, both equities and bonds. This amounts to over 2500 companies and includes the dedicated Chinese Interbank Bond Market (CIBM)
    • Investec Asset Management was awarded a RMB1.5 billion (US$245 million) investment quota
    • We can apply for additional quota to accommodate investor demand
    • We have built a cutting edge process enabling daily dealing, market standard UCITS funds to participate in the mainland China markets

    Shanghai-Hong Kong Stock Connect & Shenzhen-Hong Kong Stock Connect

    • Allows all foreign investors to purchase Shanghai-listed and Shenzhen-listed China A share equities through the Hong Kong exchange. The Shanghai-Hong Kong Stock Connect was launched in 2014, while the latter went live in December 2016
    • Investec Asset Management was the first UCITS asset manager to invest using Stock Connect
    • Over 550 Shanghai-listed A Share equities and 880 Shenzhen-listed A Share equities are now available to foreign investors
    • A Share equities are now available to foreign investors

    CIBM Direct

    Allows a wide range of foreign institutional investors quota-free access to the Chinese Interbank Bond Market (CIBM) without prior approval or licence from Chinese regulators. The CIBM accounts for the bulk of debt securities in China

    Which funds invest in mainland China?

    We have two funds focused on Chinese investment within our flagship UCITS Global Strategy Funds Luxembourg domiciled fund range. The Investec All China Equity Fund and Investec All China Bond Fund, both operate with daily liquidity.

    In addition to the funds that are focused on mainland China investing, many other Investec Asset Management funds now have the capability to invest in this market via Stock Connect, CIBM Direct and/or RQFII. Fund managers have discretion to purchase such securities where investment objectives and policies allow.

     

    Our funds

     

    Greg Kuhnert 
    Portfolio Manager
    Investec All China Equity Fund 

     


    Wilfred Wee 
    Portfolio Manager
    Investec All China Bond Fund

  • Investec All China Equity Fund

    Investec All China Equity Fund


    Why invest in All China Equity?

    • Opportunity to invest in a dynamic and growing economy, undergoing structural change at very attractive valuations
    • Investing in both onshore and offshore Chinese equities doubles the investment universe and maximises the potential of finding interesting investment opportunities
    • The All China market is a better representation of the Chinese economy, providing access to unappreciated quality blue chips in the industrial, consumer and healthcare sectors.
    • Looking through shorter-term volatility, we believe the China A-share market offers attractive longer-term potential

    Why 4FactorTM for China Equity?

    • Specialist China team based in London and in Hong Kong
    • Strong track record of picking stocks in China over the past decade
    • We follow a strong, disciplined and tested investment philosophy
    • We have grown our Chinese equities under management to US$5.7bn and managed total assets of US$36.8bn as at 31 March 2017
    • Our global perspective enhances analysis of Chinese stocks

    Fund Highlights

    • Investment universe: Chinese companies listed anywhere in the world, inclusion of A shares doubles the universe size
    • Minimum market cap: US$500m, daily liquidity US$2m, minimum coverage by two analysts
    • Portfolio construction: maximum 60 stocks
    • Performance target: 3-5% per annum above MSCI All China Index
    Investment objective

    The Fund aims to provide long-term capital growth primarily through investment in equities or equity-related securities issued by Chinese companies listed anywhere in the world.



    Downloads
    All China Equity Fund Spotlight

    Portfolio manager


    Greg Kuhnert



    Important information

    Past performance should not be taken as a guide to the future, losses may be made. 

    All information provided is as at 31.12.16 unless otherwise stated.

    The Fund’s investment objectives and performance targets will not necessarily be achieved and there is no guarantee that these investments will make profits; losses may be made.

    Fund specific risks:
    Geographic / Sector: Investments may be primarily concentrated in specific countries, geographical regions and/or industry sectors. This may mean the value of the Fund may decrease whilst more broadly invested funds might grow.

    Currency exchange: Changes in the relative values of different currencies may adversely affect the value of the Fund’s investments and any related income.

    Derivatives: The use of derivatives is not intended to increase the overall level of risk in the Fund. However, the use of derivatives may still lead to large changes in the value of the Fund and includes the potential for large financial loss.

    Developing market: Some of the countries in which the Fund invests may have less developed legal, political, economic and/or other systems. These markets carry a higher risk of financial loss than those in countries generally regarded as being more developed.

    Investing in China: Investment in mainland China may involve a higher risk of financial loss when compared with countries generally regarded as being more developed.

    Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. bankruptcy), the owners of their equity rank last in terms of any financial payment from that company.

    Concentrated portfolio: The Fund invests in a relatively small number of individual holdings. This may mean the value of the Fund may fluctuate more widely than more broadly invested funds.

  • Investec All China Bond Fund

    Investec All China Bond Fund


    Why invest in onshore Chinese fixed income?

    Strategic opportunity to invest in renminbi outperformance potential and China’s internationalisation story at attractive current yields

    • China’s continued ability to run strong current account surpluses underpins the case for expected RMB outperformance
    • China has continued to run a significant trade surplus against the US despite RMB appreciation since 2005

    Attractive valuations

    • We believe onshore Chinese bonds currently represent good value on the back of long-term disinflationary trends and positive reforms in China
    • Onshore Chinese government bonds also offer among the highest real yields versus other major bond markets, which is also supportive of currency strength

    Exposure to world’s largest emerging bond market

    • China has the world’s third largest domestic bond market, after the US and Japan. A growing recognition of China’s rising prominence in the global economy has seen increasing investor interest in RMB-denominated assets
    • We believe Chinese bonds are currently under-represented and will feature increasingly as a core holding in global bond portfolios as China opens up its capital account

    Fund Highlights

    • Investment universe: Onshore Chinese government bonds, and bonds issued by policy banks, financial institutions, state-owned enterprises and corporates that have global ratings; as well as US$ and offshore CNH denominated bonds covered by our dedicated emerging market corporate debt team
    • Broad investment mandate that allows for active management to unlock relative value opportunities across the onshore CNY, offshore CNH and US$ markets.
    • Fund targets up to 4% tracking error, aiming for 1.5% per annum outperformance versus the HSBC China Local Currency Government Bond Index over rolling 3 year periods (gross of fees)
    Investment objective

    The Fund aims to provide income with opportunity for long-term capital growth primarily through investment in debt securities within mainland China, but may also invest in bonds issued outside of mainland China. These bonds maybe priced in renminbi (either CNY or CNH) or other major global currencies.



    Portfolio manager


    Wilfred Wee


    Peter Eerdmans



    Important information

    Past performance should not be taken as a guide to the future, losses may be made. 

    All information is as at 31.12.16 unless otherwise stated.

    The Fund’s investment objectives and performance targets will not necessarily be achieved and there is no guarantee that these investments will make profits; losses may be made.

    Fund specific risks:

    Geographic / Sector: Investments may be primarily concentrated in specific countries, geographical regions and/or industry sectors. This may mean the value of the Fund may decrease whilst more broadly invested funds might grow.

    Currency exchange: Changes in the relative values of different currencies may adversely affect the value of the Fund’s investments and any related income.

    Default: There is a risk that the issuers of fixed income investments (e.g. bonds) may not be able to meet interest payments nor repay the money they have borrowed. The worse the credit quality of the issuer, the greater the risk of default and therefore investment loss.

    Derivative counterparty: A counterparty to a derivative transaction may fail to meet its obligations to the Fund thereby leading to financial loss.

    Derivatives: The use of derivatives may increase the overall risk in the Fund by multiplying the effect of both gains and losses. This may lead to large changes in the value of the Fund and potentially large financial loss.

    Developing market: Some of the countries in which the Fund invests may have less developed legal, political, economic and/or other systems. These markets carry a higher risk of financial loss than those in countries generally regarded as being more developed.

    Interest rate: The value of fixed income investments (e.g. bonds) tends to decrease when interest rates and/or inflation rises.

    Investing in China: Investment in mainland China may involve a higher risk of financial loss when compared with countries generally regarded as being more developed.

    Third party operational: The Fund’s operations depend on third parties. Investors in the Fund may suffer disruption or financial loss in the event of third-party operational failure.

Some of the funds displayed on this page may not be registered in your region and will therefore not be available for sale . Please visit www.investecassetmanagement.com/registrations to check registration by country.