Schroders China Equity fund wins award as the region’s market outlook improves

The Raging Bull Awards ceremony, held virtually this week, saw global asset manager, Schroders walk away with the award for Best (FSCA-Approved) Offshore Far East Equity General Fund. The accolade comes as the outlook for China’s equity markets begins to improve after a strained 2021.

“We have always believed that China represents a very compelling investment opportunity for those wishing to diversify their investments offshore. Of course, last year, China’s equity markets struggled to continue the momentum seen in 2020, but there are certainly reasons to be optimistic going forward,” said Kondi Nkosi, Schroders’ country head in South Africa.

Nkosi explains that the correction in Chinese equities in 2021 produced opportunities in a variety of sectors. “Compared to the beginning of 2021, current valuations are much healthier and should provide more downside protection amid the still challenging macroeconomic environment in 2022.”

According to Schroders, major catalysts for the market could be more policy easing and successful control of the pandemic in China under its zero-tolerance policy.

Speaking about the award, Nkosi says that the recognition is a nod to Schroders’ China Equity approach and management team: “The success comes from having a stable on-the-ground team who – collectively – have been managing China equity for over 46 years.”

Nkosi also says a time-tested, disciplined process focusing on quality, sustainability and valuation has also contributed to the team’s success.

In terms of portfolio construction, Nkosi explains that what sets this fund apart is that it consists of an unconstrained, concentrated portfolio of 30-60 stocks from both the offshore and onshore Chinese market, with the flexibility to invest up to 50% into China A-shares – and a focus on quality companies.

“This approach has contributed to our proven track record of consistent outperformance over the medium and long term. The fund has consistently outperformed its benchmark, the MSCI China All Shares Index since its inception in 2018. To be recognised by the Raging Bull awards is an added honour,” he concludes.