Previously only available to institutional investors in a separate account format, the new Sicav-domiciled fund, launched in Luxembourg on December 29, is based on MSIM’s Morgan Stanley China A Equity strategy. The fund aims to capitalize on pricing anomalies and inefficiencies in the market for mainland Chinese company shares traded on the Shanghai and Shenzhen stock exchanges.
MSIM said in a statement on Thursday its investment team aimed to build a high-conviction portfolio of top quality companies in industries that it believed could grow faster than overall GDP growth; have the potential to gain market share; and could be able to maintain or expand their profit margin.
The fund will have a portfolio of around 25 to 40 stocks which the investment team believes could be some of China’s current and future leading companies.
Hong Kong-based lead portfolio manager Gary Cheung said: “We believe China’s economy will shift from being driven by investments and exports, to one that is driven more by consumption and services. In our opinion, exposure to A-shares will be vital for investors to participate in this growth.”
“The China A-shares Fund is another example of how MSIM adds value to clients through active management,” said Paul Price, MSIM’s Global Head of Sales. “We’re delighted to be able to offer our China A capabilities to a broader client base via the SICAV structure”, Price added.
MSIM has been managing dedicated China A-share portfolios since 2006, and has a history of investing in Asia dating back to 1986. The company said, as of September 30, 2017, the strategy has delivered over 10% alpha (before fees) to clients over one, three and five year periods.
The team manages US$1.1bn in dedicated China A-share assets, across separate account portfolios and a closed-end US mutual fund.