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Fund Rationale: FSSA Regional China Fund

FSSA Regional China Fund
SGD Retail Class A Accumulation Shares (ISIN: SG9999000194)
Fund Manager Page

Introductory information
The FSSA Regional China Fund (the “Fund”) aims to achieve long term capital appreciation by investing in companies with assets in or revenues derived from the People's Republic of China, Hong Kong and Taiwan. The Fund is benchmarked against the MSCI Golden Dragon Index, and is a Sub-Fund of the First State Greater China Growth Fund, under the Dublin-registered First State Global Umbrella Fund PLC. 

Companies included will be selected using a “bottom-up“ approach based on fundamental research and analysis by the investment team to form a high-conviction, long-term portfolio. The Investment Managers also integrate ESG analysis and company engagement into the investment process with a belief that relevant ESG factors highlight the sustainability of a company’s earnings and could generate a significant impact on investment performance.

The SGD Class A Accumulation Shares are the oldest share class of the Fund, which was incepted on 1 November 1993. As of July 2020, the Fund managed a total asset of SGD 548.4m.
The Fund aims to achieve long-term capital appreciation by investing primarily in equity securities or equity-related securities issued by companies with either assets in, or revenues derived from, the People’s Republic of China, Hong Kong, and Taiwan and which are listed, traded or dealt in on regulated markets in the People’s Republic of China, Hong Kong, Taiwan, the U.S., Singapore, Korea, Thailand and Malaysia or in a member state of the OECD. 

As of July 2020, the Fund has 26.0% allocation in companies from or listed in Taiwan, 19.0% in companies from or listed Hong Kong, and 15.6% in China A Shares, 13.1% in P Chip, 11% in Red Chips and 5.8% in China H Shares.  Its top 5 sector exposure includes IT (27%), consumer discretionary (19%), industrials (13.3%), consumer staples (10.8%), and financials (8.9%). 
Background information and cost
The Fund has an underlying fund management fee of 150bps per annum (1.50% p.a.) and total expense ratio (“TER”) of 172bps per annum (1.72% p.a.). Endowus have arranged for the FMC to rebate the trailer fees which Endowus will refund 100% back to the client to achieve a lower net management fee of 100bps (1.00% p.a.) and net TER of 122bps (1.22% p.a.). Endowus do not charge a preliminary sales charge or any other fees, other than the all-in advice fee. The Fund is on the CPF Investment Scheme - List A Fund, and is included under the CPF Investment Scheme for Ordinary Account. It has been classified by the CPF Board under the risk classification of “Higher Risk / Narrowly Focused (Country, China).” 

The Fund is managed by First State Stewart Asia (FSSA) which is an autonomous investment management team that manages USD 26.4bn in a range of Asia Pacific and Global Emerging Market equity strategies. FSSA Investment Managers are specialists in Asia Pacific and Global Emerging Market equity strategies and sit within First State Investments, a global asset management company with USD 148bn of AUM as of 30 June 2020.
Selection criteria for Endowus
Endowus have selected the FSSA Regional China Fund as the Fund provides exposure to the China region and has a solid track record delivering good risk-adjusted returns over the long term. It consistently outperformed the benchmark on a 2-Year, 3-Year, 4-Year, 5-Year, 10-Year, and 25-Year basis. From Oct 1996 (inception date of the benchmark) to Jul 2020, the Fund has returned 10.64% annualised return compared to 6.11% annualised return of the benchmark, while keeping its volatility in line with the benchmark. In addition, the ESG integration by the team in its investment process is a differentiating factor from its peers. 

Updated by Endowus: 26 Oct 2020

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.