e-fundresearch: "Which fundamental factors are currently the most important ones when you assess China stocks?"
Magdalene Miller, Fondsmanager, "Standard Life SICAV China Equities A" (ISIN: LU0213068272) (28.03.2012): "Our investment philosophy is ´Focus on Change´. We look for changes in Industry Structure, Company Behaviour, New Developments that could affect a corporate´s future profitability and cashflow to shareholders and how these factors are reflected in the share prices." Weijun Yin, Produktspezialist, "Allianz RCM China - A - USD" (ISIN: LU0348825331) (26.03.2012): "The corporate earning visibility, ability of generating free cash flow and reasonable multiples are the most important fundamental factors we looking at."
Martha Wang, Fondsmanager, "Fidelity Funds - China Focus A-USD" (ISIN: LU0173614495) (28.03.2012): "Valuations are particularly important in view of the cyclical nature of the Chinese stock market. As such, the fund manager emphasises valuation criteria, such as price-to-book ratios, as part of the stock selection process. The manager looks for companies which are industry leaders, with high entry barriers and low costs of production. She also favours companies where senior management has a flexible mindset and strategy; she regards these as essential requirements for capturing market share and driving earnings growth in China’s rapidly changing environment."
Mads Kaiser, Portfolio Manager, "Jyske Invest Chinese Equities" (ISIN: DK0016262801) (27.03.2012): "Cyclical companies are generally trading at very low multiples – stable companies are generally expensive. Investors are anticipating a number of rather weak quarters to come in China – hence this could be a great time to buy for the long term investor, that is willing to look beyond the cycle, as we believe the structural rise of China is not questionable. The economy is showing weakness – but nothing alarming, so I expect politicians will focus more on positioning themselves in the process of leadership change than making big reforms. And inflation is still an important issue, so the central bank will keep rates fairly steady. And I don’t expect any extreme loosening of loan quotas either. Basically I expect continued micromanagement from Beijing in 2012. And that is fine – because it creates a stable operating environment for excellent companies to develop their business."
Yiqian Jiang, Portfolio Manager, "DWS Invest Chinese Equities LC" (ISIN: LU0273157635) (26.03.2012): "Our central belief is that ultimately cash flow and Cash Flow Return On Investment (CFROI) will determine share prices over the medium and long term. Therefore, we focus our efforts on identifying superior growth opportunities at reasonable valuations. We are aware of the swing factors of the slow-down in the external demand from the developed economies and we will mainly focus on the stocks with growth prospects driven by domestic demand or favourable government policies. At the same time, we believe the gradual credit easing is underway and we would seek opportunities in investing stocks which may ride on the credit cycle. We will follow the economic indicators closely and allocate our portfolio accordingly."
Laura Luo, Fondsmanager, "Schroder ISF China Opportunities A Acc" (ISIN: LU0244354667) (29.03.2012): "In focusing on fundamentals, investments must firstly be of high quality, which we define by both the quality of earnings as well the quality of management, and secondly, the investments must exhibit structurally superior return profiles, which we define as those companies that can earn a higher return on investment capital than their weighted average cost of capital."
e-fundresearch: "Which are the most important elements in your investment process?"
Magdalene Miller, Fondsmanager, "Standard Life SICAV China Equities A" (ISIN: LU0213068272) (28.03.2012): "The essence of our Investment process is our investment philosophy - ´Focus on Change´. We invest in stocks where we have evidence to believe that corporate prospects will be better than the market is pricing in. Key considerations are our non-consensus insights and upside materiality. Peer reviews as part of the investment process are essential in ensuring that the idea is always relevant and the insights powerful."
Weijun Yin, Produktspezialist, "Allianz RCM China - A - USD" (ISIN: LU0348825331) (26.03.2012): "The deepening company research, supplemented by our proprietary Grassroots research are the most important elements in our investment process."
Martha Wang, Fondsmanager, "Fidelity Funds - China Focus A-USD" (ISIN: LU0173614495) (28.03.2012): "The fund manager adopts a bottom-up approach to stock selection. Fidelity’s proprietary research is the key input with the emphasis on in-depth fundamental analysis of individual companies. She prefers stocks that can offer growth at reasonable valuations. While there are no systematic biases in the management of the portfolio, this focus results in a growth tilt. As a bottom-up stock picker, she is free to invest outside the benchmark and will invest across the market cap spectrum. She runs a relatively concentrated portfolio of typically 80 to 120 stocks and takes large positions when conviction permits, so the top ten will see a number of positions that deviate from the benchmark. She is unconstrained by benchmark, active sector and country weights are a result of bottom-up, stock selection."
Mads Kaiser, Portfolio Manager, "Jyske Invest Chinese Equities" (ISIN: DK0016262801) (27.03.2012): "At Jyske we focus on constructing a well diversified/balanced portfolio with cheap cyclical companies and not too expensive structural growth companies. On top of that we prefer companies that show increasing earnings and strong returns on invested capital. Picking the right stocks and building diversified portfolios are the most important elements of our process – not market timing. We focus on valuation and momentum when we pick stock – because these factors have contributed to excess return in the long run. Our diversification-strategy will not reward investors with spectacular outperformance in a given year. Our aim is long term solid results – consistency is very important for us."
Yiqian Jiang, Portfolio Manager, "DWS Invest Chinese Equities LC" (ISIN: LU0273157635) (26.03.2012): "Our core belief is that markets are not always efficient, we believe that fundamental bottom-up research combined with top-down sector allocation and strict risk management will enable us to generate alpha on a consistent basis. We apply a bottom up investment approach and our core competence lies in our ability to conduct in-depth, effective bottom-up fundamental research and sector analysis. We believe in active portfolio management and aim to add majority of value through stock selection and partly through sector allocation:
• Effective stock selection is the major opportunity to add value
• When analyzing a company, we focus on improving cash flow return on investment
• The greatest share price opportunities come about as a result of change in policy/macro outlook, industry trends, or company’s strategies/competitiveness.
• The long-term prospects of a company determine its underlying value."
Laura Luo, Fondsmanager, "Schroder ISF China Opportunities A Acc" (ISIN: LU0244354667) (29.03.2012): "As an active manager, Schroders has demonstrated the ability to gain a competitive advantage from our disciplined approach leveraging original research by experienced professionals. We believe the strength of our product lies in the following:
Highly experienced and cohesive portfolio management team
The portfolio management team for our Greater China equity strategy comprises 5 portfolio managers* with an average of 18 years* experience, of which 14 years* are with Schroders. The experience of the team through market cycles, the growth of the market, companies and management, provides Schroders with a unique understanding of the opportunities in the market. The cohesiveness of the team lends itself to first, a greater understanding of the strengths and biases of individual professionals allowing greater focus on the key factors driving company performance and second, a focus on investment and not on administrative or distracting issues. An experienced team is critical to gain the greatest insight into the opportunities in the market while the cohesiveness of the team ensures efficiency in implementation. These we believe, are the distinct advantages Schroders posses over our competitors.
Significant commitment to bottom-up research in the region
Our commitment to bottom-up research is demonstrated in the considerable resources we have devoted to building an experienced team of 19 Asia ex-Japan research analysts*, 11* of whom focus on the Greater China market. Company visits are integral to our research process as management competence is a key determinant of a company’s future success. In a typical year, our analysts will conduct over 780 meetings with companies based throughout the Greater China region. Our meetings are with key decision makers and typically on a one on one basis providing better access to all levels of management enabling greater and timelier insight into the growth drivers of the companies we invest. Further, by leveraging local research resources, meetings conducted in local languages we believe, will offer more efficient discussions as well as greater detail into a company.
This proprietary research provides our specialised portfolio managers an in-depth understanding of the various investment opportunities, giving them the confidence to implement their stock picks with strong conviction, which in turn leads to long-term sustainable alpha generation.
A disciplined and repeatable investment process
Schroders has a disciplined approach to managing Asia ex-Japan equity. The robust process has been enhanced over more than 25 years. In our approach, we place primary emphasis on our capability to generate investment insight through bottom-up research with a top-down macroeconomic and risk-controlled overlay. This repeatable approach and discipline in execution provides confidence for our investors with continued strong performance."
*All figures as of 31 December 2011, Source: Schroders
e-fundresearch: "Which over- and underweight positions are currently implemented in China funds?"
Magdalene Miller, Fondsmanager, "Standard Life SICAV China Equities A" (ISIN: LU0213068272) (28.03.2012): "Overweight in Information Technology and Consumer Discretionary - Consumption growth is still underestimated by the current valuation and there are companies that are emerging to be national champions from very nascent industries.
Underweight in Financials and Materials - Mammoth companies within the financial sectors are unlikely to surprise as they are well researched and well understood by the market. Their corporate behaviour is very much subject to Govt policy. The Materials sector will continue to struggle with over-capacity and slower infrastructure spending."
Weijun Yin, Produktspezialist, "Allianz RCM China - A - USD" (ISIN: LU0348825331) (26.03.2012): "The relative positioning against benchmark is a result of bottom-up stock selection, currently we are overweighting industrials, I.T. while underweighting financials and telecom."
Martha Wang, Fondsmanager, "Fidelity Funds - China Focus A-USD" (ISIN: LU0173614495) (28.03.2012): "The top positive bets in the portfolio are directly and/or indirectly associated with the domestic growth theme in China. As the middle class expands and their wealth level increases they will look to increase their comfort level and enjoy a better life. Some of the lifestyle names the fund manager invests in are eating out and wine names. Other names benefiting from people’s lifestyle change are leisure. Some of the broader consumption names also benefit such as Belle International Holdings, which benefits from increasing consumption of women’s shoes and apparels in China. Hence the fund has overweight positions in the consumer discretionary and consumer staples sectors. In sectors that are susceptible to regulatory changes, for example within banking and energy, the fund has underweight positions, also given the lack of quality companies and since this is an area where government intervention often affects the profitability of the companies. Energy accounts for around 19% of the MSCI index and therefore by underweighting the sector the fund manager diversifies her portfolio. Similar reason applies for telecommunications. In fact, the fund manager has been underweight financials, energy and telecoms since these are mostly government controlled."
Mads Kaiser, Portfolio Manager, "Jyske Invest Chinese Equities" (ISIN: DK0016262801) (27.03.2012): "We like the internet names in China - maily Baidu, Tencent and gaming company Netease. PC-penetration is on the rise – fast – and e-commerce is also growing fast. On top of that online advertising is growing and you have a dramatic increase in the number of platforms (smatphones and tablets). Valuation is also reasonable – the companies generates a lot of free cash flow. Traditional retailing - both food and staples retail as well as department stores - are underweighted in our fund as we struggle to find value. We prefer cheaper plays on increasing consumption like Great Wall (autos and pick-up trucks), Prince Frog (very cheap baby care company) and China Overseas Land (conservative real estate giant gaining market share). Most banks look attractive to us as well."
Yiqian Jiang, Portfolio Manager, "DWS Invest Chinese Equities LC" (ISIN: LU0273157635) (26.03.2012): "Key overweight’s:
• Consumer discretionary (positive on auto names with strong pipelines this year, as well as home appliance companies that would benefit from government’s supportive consumer policy).
• Utility (especially on natural gas distributors which benefit from steady growth in gas supply in China as well as potential more tariff hikes).
• Healthcare (cheap valuation with earnings stabilizing and recovering gradually after the reduction of drug prices by the government last year)
• Telecom (lack of catalyst in the near term with little room for earnings to beat forecast significantly).
• IT (we trimmed Internet stocks lately after their strong rebound on concerns of potential earnings disappointment in the near term)."
Laura Luo, Fondsmanager, "Schroder ISF China Opportunities A Acc" (ISIN: LU0244354667) (29.03.2012): "We started to increase our exposure to more cyclical names that looked attractive fundamentally in preparation for what we see as a better environment for Chinese equities. This is not to say that we are still not cautious on external demand and decelerating growth of China’s FAI in the short-term, rather that equities have priced in most of the bad news and we are buying into some of names set to benefit from an easier environment going forward. As the year moves on, we expect to see more supportive government policies and more reforms being pushed forward. Opportunities will continue to emerge for re-rating of macro sensitive sectors off historically low multiples, at the expense of more defensive names, especially those that have already performed well and are now expensive. For the longer term, we retain our relatively positive view on China’s GDP growth. The proposed 12th five-year plan is putting the right emphasis on structural change of China’s growth model from investment driven to consumption driven, as well as promotion on environmental protection, clean energy, and service industry development. We continue to look for opportunities to build positions in companies we like, including consumption, clean energy, health care, logistics, capital goods and the service industry."
e-fundresearch: "Please comment on the performance and risk parameters of your fund in the current year as well as over the past 3 and 5 years."
Magdalene Miller, Fondsmanager, "Standard Life SICAV China Equities A" (ISIN: LU0213068272) (28.03.2012): "Standard Life China Sicav Fund has returned -4.5% over the last 12 months ending this Feb compared to an index return of -1.2%. The tracking error is 6.6, giving an information ratio of -0.5. Over the past 3 years, the return was 112% compared to an index return of 85.3% and for 5 years, the fund returned 65% compared to an index return of 43%. The tracking error was 4.9 over 3 years and 6.1 over 5 years, producing an information ratio of 0.9 and 0.5 respectively. We ranked 30 Percentile, 25 Percentile and 22 percentile in our peer group over 1,3 and 5 years. Standard Life China Sicav Fund has been generating excellent, consistent returns with good use of risk. All numbers are in US$, which is the base currency of the fund."
Weijun Yin, Produktspezialist, "Allianz RCM China - A - USD" (ISIN: LU0348825331) (26.03.2012): "The fund is performing in line with the MSCI China index return year-to-date. Over the past 3 and 5 years, the fund outperformed the benchmark substantially and is positioned in the top quartile acc to Morningstar data. In terms of risk parameters, the tracking error has been ranged between 5-10% p.a. over past 5 years and the fund manager is looking for keeping the T/E at lower end of the range by reducing factor risk."
Mads Kaiser, Portfolio Manager, "Jyske Invest Chinese Equities" (ISIN: DK0016262801) (27.03.2012): "Several factors may benefit Chinese equities in 2012:
- Economic growth is still resilient in China - helped by very solid private spending and investment; should hold up very well even if Europe shows weakness
- The Chinese government has the flexibility to stimulate demand again if the global economy shows further weakness. The flexibility is intact both in relation to fiscal and monetary policies.
- China wins when commodity prices decline because the country imports great volumes of commodities and price declines will put a damper on inflation in China;
- In general, we expect lower inflation which may lead to interest-rate cuts in 2012; Consumers are bullish about the future and have the possibility of increasing consumption due to low debt and high savings;
- The major businesses in China also have low indebtedness and possibility of increased dividend payment;
- The valuation of the Chinese equity market is close to a historical low.
But the risk involved in equity investment is currently high. And some special characteristics may affect China adversely:
- There is considerable risk that analysts keep lowering their earnings estimates in the cyclical and interest-rate sensitive sectors
- The downturn in the housing market has not slowed down and this is likely to put a damper on the activity level in 2012
- China will undergo a change of leadership in the coming years. Particularly the global ambitions for the new leadership are unknown. Reforms may disappoint."
Yiqian Jiang, Portfolio Manager, "DWS Invest Chinese Equities LC" (ISIN: LU0273157635) (26.03.2012): "Risks to watch in the current year:
Key risks to the market:
1) economic growth may be bottoming in Q2 rather than Q1, hence delaying the credit easing from the government;
2) near-term risk in corporate earnings if credit easing is less aggressive; 3) risk in European credit markets.
Key risks to the economy:
1) deterioration in European/US economy leading to more slowdown in exports;
2) more slow-downs in real-estate investments to drag down overall economic growth; 3) overall slower growth outlook in China this year."
Laura Luo, Fondsmanager, "Schroder ISF China Opportunities A Acc" (ISIN: LU0244354667) (29.03.2012): "The Fund lost ground against the benchmark over the year 2011. While an underweight position in the Materials as well as stock selection in Health Care and Consumer Staples sectors were positive overall, this was offset by disappointing stock selection among Financials, Industrials and Consumer Discretionary. Over the past three years, the fund gained strongly against the benchmark owing to positive stock selection in Industrials, Financial and Health Care sectors. Our overweight position in Consumer Staples also helped the relative performance."
e-fundresearch: "Did your fund outperform or underperform vs. benchmark over the past 5 years and which part could be linked to securities selection (Performance Attribution)?"
Magdalene Miller, Fondsmanager, "Standard Life SICAV China Equities A" (ISIN: LU0213068272) (28.03.2012): "The Standard Life China Equities Fund has outperformed the index by 50% and is at top quartile performance versus the peer group over the past 5 years. This is a highly concentrated fund with typically around 30-40 stocks, 85% of the out-performance was attributable to stock selection."
Weijun Yin, Produktspezialist, "Allianz RCM China - A - USD" (ISIN: LU0348825331) (26.03.2012): "The stock selection contributed more than 90% to the outperformance over the past 5 years."
Martha Wang, Fondsmanager, "Fidelity Funds - China Focus A-USD" (ISIN: LU0173614495) (28.03.2012): "The fund underperformed MSCI China benchmark for the 1 year, 3 years and 5 years periods. Although the fund is not bound by the benchmark tracking error range, the fund is managed with awareness to the benchmark. Over the 1-year period the fund underperformed the index as selected consumer stocks and the underweight stance in telecoms weighed on returns. The overweight stance in consumer sectors detracted during the period due to weak performance within the consumer segments. In particular, the overweight exposure to China Mengniu Dairy hurt returns as its shares fell on the back of recent quality issues with its raw milk supply. The manager held the company as it benefited from its dominant market position and the long-term secular trend of increasing dairy product consumption. Elsewhere, financials gained on signs of easing monetary policy in China. Consequently, lack of exposure to Bank of China and Agricultural Bank of China were among the biggest detractors from performance. The holding in Chinese banks was increased over the period as they stand to benefit from China Banking Regulatory Commission’s recent delay on Basel III implementation, lifting short-term fund raising pressure. The underweight stance in China Mobile and not holding China Telecom hurt relative performance as investors favoured the sectors for defensive reasons."
Mads Kaiser, Portfolio Manager, "Jyske Invest Chinese Equities" (ISIN: DK0016262801) (27.03.2012): "The past 5 years has shown great performance relative to both benchmark and other dedicated China funds. 9 of 10 MSCI sectors show positive securities selection contribution. And overall more than 95% of our outperformance can be attributed to securities selection rather than sector selection. We are very happy with the results."
Yiqian Jiang, Portfolio Manager, "DWS Invest Chinese Equities LC" (ISIN: LU0273157635) (26.03.2012): "The fund slightly underperformed the benchmark for the past 5 years as end February 2012, 37.98% (net of fees) vs 45.6% (benchmark) in USD term, and ranked the 1st quartile in the peer group*. Or in the EUR term, 36.2% (net of fees) vs 43.8% (benchmark) over the past 5 years as end February 2012*."
*Source: Harvest Global Investments Limited, MorningStar Direct.
Laura Luo, Fondsmanager, "Schroder ISF China Opportunities A Acc" (ISIN: LU0244354667) (29.03.2012): "The Fund outperformed the benchmark over the past 5 years and stock selection is the largest contributor to outperformance, accounting for approximately 80% of the value added."
Alle Performance Daten per 19.03.2012: