Schroders has launched its first China onshore private fund targeting the country's high-net-worth and institutional investors.
Citywire AAA-rated Jack Lee is the portfolio manager for the new fund, which invests primarily in China’s A-share market.
Lee heads the company’s China A-share research team, which comprises of 23 on-the-ground fund managers and analysts across Greater China.
Schroders obtained the private securities investment fund manager (PFM) licence in December 2017. Under the licensing rules, the firm must launch at least a fund within six months after securing the license.
The China’s A-share market – which has a universe of over 3,500 stocks – is by far the largest Chinese equity market and the world’s second largest equity market by market cap.
Lee said active, fundamental driven stock-picking is the best approach to exploit market inefficiencies as many of the best investment ideas have not been well-researched.
He added that Schroders prefers to invest in a concentrated number of stocks that are well-placed to grow under a wide range of macroeconomic outcomes.
The company's spokesperson told Citywire Asia that Schroders also offers a number of Chinese equities funds - including the Schroder China Equity Alpha fund, Schroder ISF Greater China fund and Schroder ISF China Opportunities fund - to investors outside China.
When asked if the company has plans to launch more China onshore funds, the spokesperson said the company will first focus on ensuring the success of this new fund.
Just last month, Aberdeen Standard Investments has also launched its first onshore private fund in China. Just like Schroders, Aberdeen’s fund invests primarily in the A-share market.
At the time of the launch, Aberdeen Standard told Citywire Asia that the new onshore fund adopts a similar investment strategy to its Aberdeen Global China A Share Equity fund launched in March 2015.
Aberdeen Standard Investments, Fidelity International, UBS Asset Management, Fullerton Fund Management and Man Group are among asset managers that have secured PFM license.