The dynamic, fast-changing equity market in China offers investors ample unique investment opportunities to capture the growth potential of existing investment trends and those that have emerged after the Covid-19 outbreak.
For example, China is already one of the markets with the fastest-growing online retail penetration.The acceleration and evolution of the country’s e-commerce ecosystem in the post Covid-19 era are set to prompt more investment ideas.
The re-organisation of supply chains, amid rising geopolitical risks,the disruption from the virus outbreak and the growing importance of self-sufficiency for many of the industries in China, is also bringing forth a lot of new opportunities, such as production automation, robotics and semiconductors, to name but a few.
Our dynamic focus helps us identify these evolving trends early on and capitalise on these growth opportunities across different industries and sectors in China.
Apart from equities, the country’s fixed income market also offers growth potential. The Chinese onshore bond market is the world’s second largest by market value, while the offshore Chinese US Dollar corporate bond market is also the largest within the Asian universe, providing a lot of interesting opportunities for income-seeking investors.
While yields in other developed markets are hitting new lows, Chinese debts are offering relatively attractive yields. Its diverse universe of income opportunities, both onshore and offshore, also offers diversification. The inclusion of its domestic bond market in major global bond indices will likely fuel investors’ interest in the market going forward.
Source: Bloomberg, as of June 2020
China High Yield (HY): ICE BofA Asian Dollar High Yield Corporate China Issuers Index; Asia HY: ICE BofA Asian Dollar High Yield Corporate Index; US HY: ICE BofA US High Yield Index; Europe HY: ICE BofA Euro High Yield Index
China Investment Grade (IG): JACI China Investment Grade Index; Asia IG: ICE BofA Asian Dollar IG Corporate Index; US IG: ICE BofA US Corporate Index; Europe IG: ICE BofA Euro Corporate Index
The fund’s active asset allocation between Chinese equities (30-70%), Chinese bonds (30-70%), other asset classes (0-20%) and Cash (0-30%)~ aims to capture growth and income opportunities in China. We will also actively manage the exposures to onshore equities and fixed income to take advantage of the growth potential of onshore assets. In addition, risk management on currency and interest rates is implemented from time to time with the aim to reduce potential losses during difficult markets.
~The exact asset allocation may deviate from the range mentioned above without prior notice to investors, please refer to the relevant offering document for details.
With zero or even negative interest rates, income on assets will continue to be one of the important components of investors’ returns. The fund offers investors a regular monthly payout, backed by a sustainable stream of income mainly from the fixed income portfolio, and to a lesser extent from the equities in the fund.
The Fund is managed by Schroders’ three top-class investment teams, namely the Multi- Asset team, the Asian equity team, and the Asian fixed income team. With proven tracking records in Asian markets and awards earned from Lipper Fund Awards and SCMP Fund Awards, these teams are well-positioned to capture the capital gain and income opportunities in China markets.
Our business is structured around a number of strategic capabilities, which combine to meet a variety of client requirements. Please visit the Strategic Capabilities - Multi-Asset Solutions page to discover how we deliver outcomes to suit a variety of investment goals.
^In respect of the distribution units, the manager will declare and pay monthly distributions. However, the distribution rate is not guaranteed. Distribution yield is not indicative of the return of the fund. Distributions may be paid from capital of the fund. Investors should note that where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the value of units.
Source: Schroders. Investment involves risks. Please refer to the relevant offering documents for fund details including risk factors. This material is issued by Schroder Investment Management (Hong Kong) Limited and has not been revised by the SFC.