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Fund Rationale: Schroder International Selection Fund Greater China Fund

Schroders Int’l Selection Fund Greater China
SGD Retail Class F Accumulation Shares (ISIN: LU1317429246)
Fund Manager Page

Introductory information
The Schroder International Selection Fund (”ISF”) Greater China Fund (“the Fund”) aims to provide capital growth by investing in equities of People's Republic of China, Hong Kong SAR and Taiwan companies. The Fund is benchmarked against the MSCI Golden Dragon NR Index, and is suitable for investors who seek long-term capital growth, and understand the risks associated with investing in equity and equity related securities in China, Hong Kong, and Taiwan. The Fund is a Sub-Fund of Schroder International Selection Fund.

The inception date of the oldest share class of the Fund is 28 March 2002, the SGD Class F Accumulation Shares were incepted on 24 November 2015.  As of July 2020, the Fund managed a total asset of SGD 1.9bn.

 

Characteristics
The Fund invests at least two-thirds of its assets in equities of companies in People's Republic of China, Hong Kong and Taiwan.The fund may invest directly in China B-Shares and China H Shares and may invest less than 30% of its assets in China A Shares through (i) Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, (ii) the Renminbi Qualified Foreign Institutional Investor ("RQFII") scheme and (iii) regulated markets.The Fund may use derivatives with the aim of reducing risk or managing the fund more efficiently. The Fund may also hold cash. This Fund may use financial derivative instruments as a part of the investment process. Derivatives carry a high degree of risk and should only be considered by sophisticated investors.

As of July 2020, the Fund holds 67.4% in equities from China, 17.7% from Taiwan, and others including Hong Kong, Australia, and Canada. Its top 5 sector exposure includes IT, consumer discretionary, financials, communication services, and materials, each ranging from an allocation of 7.1% to 26.9%.

 

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 170bps per annum (1.70% 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 75bps (0.75% p.a) and a net TER of 95bps (0.95% 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 Diversified (Country, Greater China).”

 

Selection criteria for Endowus
Endowus have selected the Schroder ISF Greater China Fund as we believe that investors will benefit from a time-tested investment process led by Head of Greater China, Louisa Lo, who has managed the strategy since September 2002, making her one of the longest-tenured managers in the category. The Fund has outperformed the Index at almost all times since inception, standing at a return of 96.8% vs 64.9% as of July 2020 (annualised 15.6% vs 14.8%), with only slightly higher annual volatility of 17.3% vs 16.1% in the past 3 years.

Updated by Endowus: 25 Sept 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.