Endowus Satellite Portfolios: On China equities — a 2022 update
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Endowus Satellite Portfolios: On China equities — a 2022 update

Mar 2023
Dec 2022
China stocks - Endowus China Equities Portfolio performance and outlook
  • The Endowus China Equities Portfolio could enjoy tailwinds from a gradual relaxation of the zero-Covid policy, continuous accommodative policies, and the green agenda.
  • The portfolio, part of Endowus’ Satellite offerings, captures the best opportunities in both onshore and offshore Chinese equity investing.
  • Long-term growth remains on the cards for China stocks; the recent easing of some Covid-19 curbs already helped drive a rally in the market.

What's the outlook ahead for China stocks?

The Chinese equities market has been hammered by the country’s strict lockdowns to contain Covid-19. While the rest of the world opens up with the global rollout of vaccines, the country with the world’s largest population has been resolute in keeping quarantine measures in place. To be sure, China has recently allowed for some easing measures in large cities like Shanghai, prompting opportunistic traders to hunt for stocks that could benefit from the reopening.

The chill on the technology sector has also hit Big Tech companies in China. The pressure comes on top of concerns that the authorities are keeping a tight watch over the leaders of these tech firms, which hold a swathe of data on Chinese citizens.

The Endowus Investment Office continues to believe in the long-term growth of China. With the easing of some Covid-19 restrictions, there has already been a rally in the China equity market. Investors are optimistic about domestic consumer demand picking up and the economy getting back on track after being derailed by the pandemic over the past three years.

JP Morgan Asset Management (JPMAM) expects to see continuous accommodative policies and a gradual relaxation of China’s zero-Covid policy in 2023. These could help stabilise Chinese asset prices, the firm says in a recent report. JPMAM manages the China A-Share Opportunities Fund, which is part of the Endowus China Equities Portfolio. 

In addition, the Chinese government’s plans to bring about high-quality growth and structural improvement in the economy may well lead to opportunities for the domestic hardware technology sector, JPMAM suggests.

The green agenda, meanwhile, is still alive in China — President Xi Jinping has reiterated the country’s pledge to become carbon-neutral by 2060. Abrdn highlights that huge investments in renewable energy and storage are required to decarbonise economies. In particular, the fund manager expects more investments to flow into upgrading machinery and improving energy efficiency. Companies focusing on renewable energy, electric vehicles (EVs), batteries, and other related infrastructure will stand to benefit from this shift, says Abrdn, which manages the AS SICAV I - China A Share Equity Fund.

The Endowus China Equities Portfolio, as it stands at the time of writing, is likely to enjoy tailwinds from these upcoming trends, given its healthy exposure to the Chinese information technology sector and green energy.

How we constructed the Endowus China Equities Portfolio: a recap

The Endowus China Equities Portfolio is designed to efficiently capture the best opportunities in both onshore and offshore Chinese equity investing.

The portfolio is designed to give access to the opportunities in China and the Greater China universe, and taps into the various types of Chinese equities, such as:

  • Onshore China equities: Chinese companies listed within mainland China (Shanghai and Shenzhen), also known as China A-Shares or B-shares;
  • Offshore China equities: Chinese companies listed on stock exchanges outside of China, such as in Hong Kong (H-Shares), or even the US (ADRs) or other offshore markets where Chinese companies are listed;
  • Greater China equities: Companies from Hong Kong, Taiwan, and Macau listed in their respective stock exchanges; and
  • Other equities: Companies from countries with no cultural ties with China, but are listed in stock exchanges within Greater China, or companies that have a significant business dependency to China.

China has seen rapid growth, undergone significant structural reforms, and become the world's second-largest equity market with return opportunities across various new and traditional sectors. The Endowus China Equities Portfolio allows investors keen on China exposure to navigate this market through leading experts who have invested in China for decades.

Underlying funds of the Endowus China Equities Portfolio

Fund name Investment focus
AS SICAV I - China A Share Sustainable Equity Fund • Concentrated portfolio of China A-shares
• Quality bias
JP Morgan China A-Share Opportunities Fund • Large portfolio of China A-shares
• Growth bias
FSSA Regional China Fund • Greater China equities, including Chinese, Hong Kong, and Taiwan companies
• Quality bias
Schroder ISF Greater China Fund • Greater China equities, including Chinese, Hong Kong, and Taiwan companies
• Quality and growth bias
Allianz All China Equity Fund • All types of China equities, including onshore and offshore or US-listed Chinese companies, as well as Hong Kong, Taiwan, and Macau companies

Note: Information is updated as of 24 Nov 2022.

Portfolio allocation of the Endowus China Equities Portfolio

Fund name Investment focus Fund manager Allocation Total fund-level fees Cashback on trailer fees Fund-level fees after Cashback
AS SICAV I - China A Share Sustainable Equity Fund China A Abrdn 5% 2.02% (0.88%) 1.15%
JP Morgan China A-Share Opportunities Fund China A JP Morgan Asset Management 50% 1.80% (0.30%) 1.50%
FSSA Regional China Fund Greater China First Sentier 15% 1.72% (0.75%) 0.97%
Schroder ISF Greater China Fund Greater China Schroders 20% 1.30% (0.00%) 1.30%
Allianz All China Equity Fund All China AllianzGI 10% 2.25% (0.88%) 1.38%
Endowus China Equities Portfolio 1.74% (0.39%) 1.35%

Source: Endowus Research. Note: Data is updated as of 24 Nov 2022.

2022 performance

The Endowus China Equities Portfolio registered negative returns in the third quarter of 2022. One of the major detractors from performance was the portfolio’s underweight to energy names, which rallied over the quarter. On the positive side, strong returns from the information technology (IT) sector and an underweight to the consumer discretionary sector contributed meaningfully to performance. 

On a year-to-date basis, as of 31 Oct 2022, the Endowus China Equities Portfolio returned -37.0%, which is roughly in line with the MSCI China All Shares Index’s return of -36.4%. The portfolio tends to have a heavier allocation to China A-shares than the MSCI China All-Shares Index does — around 70% in the portfolio, versus 50% in the index — which can lead to a difference in the performances of the index and the portfolio. 

A number of the portfolio’s underlying funds have a growth and quality bias, as well as an underweight to energy names, in comparison to the index. These biases detracted from relative performance in the year-to-date period.

Endowus China Equities Portfolio returns

SGD, monthly data as of 31 October 2022

Oct 2022 Q3 2022 Q2 2022 Q1 2022 YTD 2022 2021 2020 3Y
Endowus portfolio
Endowus China Equities Portfolio -10.1% -17.6% 2.3% -16.9% -37.0% -3.4% 53.9% -0.3% -0.9%
Relevant market indices
MSCI China All Shares Index -14.8% -18.0% 5.5% -13.8% -36.4% -11.2% 31.1% -7.3% -20.3%
MSCI China A Onshore Index -9.5% -16.3% 4.2% -14.3% -32.4% 6.1% 37.6% 1.5% 4.7%

Source: Endowus Research, Bloomberg. Portfolio returns are net of fund-level fees, while indice returns includes dividends without fee deduction. For the methodology of representative historical data, please refer here.

Read more: The top four questions we get on investing in China

A core-satellite approach

Launched in November 2021, Endowus Satellite Portfolios are used to supplement the core portfolios and are meant to express an active decision by the investor to provide further diversification opportunities to try to generate alpha (above market returns), or to express a specific investment view or strategy. This can be done through a single fund or a portfolio of funds. 

Here's how satellite strategies differ from that of core portfolios:

  • They tend to be more concentrated in nature and narrow in exposure, targeting a certain sector or country or theme, as compared to the passive broad market exposure of core portfolios.
  • While they may follow an index and can be passive, most satellite portfolios and funds tend to be active in the way they invest and seek to generate alpha.
  • The investments tend to be shorter term in nature and reflect tactical or opportunistic investment strategies, as opposed to the strategic nature of core investments.

Find out how our other Satellite solutions have performed in 2022 — click here to read about the Endowus Technology Portfolio and the outlook on tech stocks, or follow this link for an update on the Endowus Global Real Estate Portfolio.


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Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endowus Singapore Pte. Ltd. (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

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