Fund Rationale: JP Morgan China A-Share Opportunities Fund

JP Morgan China A-Share Opportunities Fund (the "Fund")
SGD Class A Accumulation Shares (ISIN: LU1655091616)
Fund Manager Page
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Endowus has selected the Fund as it offers:

  • Systematic investing process producing a concentrated portfolio of growth stocks in the China A space with higher quality attributes;
  • Highly experienced PM and sizeable team that produces well-informed bottom-up research in the universe, identifying companies positioned for long-term growth;
  • ESG integration accounting for material ESG risks, which adds value in the China A space where ESG approaches are still uncommon; and
  • Retail share class with 100% trailer fee rebated back to Endowus investors to achieve lower cost of access.

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Key Information

Fund Objective: The Fund aims to provide long-term capital growth by investing primarily in companies from the People's Republic of China (PRC).

Suitability: Investors who seek long-term capital growth through single country exposure to domestic Chinese equity markets, understand the risks associated with emerging market equities and China, are willing to accept those risks in search of potential higher returns, and are looking to use it as part of an investment portfolio and not as a complete investment plan.

Cost:
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  1. Total Fund-level Fees include fund management fee of 1.50%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus do not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 1 September 2015
Share Class Inception: 18 August 2017
Benchmark: CSI 300

Fund AUM: SGD 11.4bn
Source: MorningStar as of 24 June 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 30 April 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.

Selection Criteria

Endowus has selected the JP Morgan China A-Shares Opportunities for its portfolio of growth names in the China A space, underpinned by fundamental conviction on the long-term growth and quality of the companies and managed by a highly experienced team.

The strategy is driven by a growth-oriented fundamental research process that attempts to identify the best ideas within the China A space, evaluating the companies in terms of long-term trajectory (typically for a period of 5 years) -- the team enjoys tapping on China’s “new economy” growth story, and the bottom-up research reflects the various sectors that the team believes are positioned for long-term growth. Additionally, we also like the fact that the companies are assessed through a quality lens to ensure a disciplined approach in growth investing, including ESG negative screenings and a proprietary ESG risk framework designed to integrate material risks into the bottom-up analysis. The framework also serves as a cue for further engagement with the companies to improve their ESG practices, and this approach has earned the Fund an SFDR rating of Article 8 and a top-tier ESG scoring among its peers in the China A space.

Based on fundamental analysis, companies are systematically bucketed into three strategic classifications (Premium, Quality, and Trading) to reflect the team’s level of conviction into each individual names, which subsequently guides the construction of the portfolio -- a higher position will be taken on Premium and Quality names, while companies classified as Trading will be allocated smaller sizes to take advantage of favourable valuations. The resulting portfolio is a concentrated basket of 50 to 70 high-conviction names, which the team thinks will benefit growth investors looking for quality investments to deliver excess returns.

The team is managed by Co-PMs Howard Wang (Head of Greater China) and Rebecca Jiang (Country Specialist), with 26 and 16 years of experience respectively. They are supported by a 14-member dedicated Greater China analyst team, each specialising in sectors within China and commanding a deep knowledge into the market-specific opportunities and risks, as well as a 6-member Emerging Asia analysts who produce analysis on Chinese companies operating in sectors that are across the region. The Fund is also allowed to invest into H shares to capture arbitrage opportunities between A and H shares for companies with dual listings.

The Fund, in line with its investment objective, has a good track record of generating top-tier returns over the long term compared to its peers and benchmark. Investors should note that owing to its bias in growth stocks, the Fund may experience periods of volatility. Nevertheless, over a longer economic cycle, the Fund has proven to provide superior risk-adjusted returns. As this is a country-focused solution, investors are encouraged to use this Fund as a satellite position rather than a core holding.

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Updated by Endowus: June 2021

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