Email of the day (1) - On investing in China
Comment of the Day

November 28 2013

Commentary by David Fuller

Email of the day (1) - On investing in China

"I was very interested in your views as to China being quite cheap - or at least compared with some well known indices!

"I would be interested in your views of how to enter this market. Many funds and collectives seem to have high annual and initial costs, frequently above 2 or 3 % pa.

"I have been a subscriber for 10 years next month- you and Eoin have become distant but fond (and doubtlessly well off) relatives!"

David Fuller's view

Thank you for your email and both Eoin and I are honoured to be thought of as 'distant but fond relatives'.

My main China position, which I have held for several years, is in the USD denominated Atlantis China Healthcare Fund (ATCHLTH ID) launched and run by Ms Yang Liu since 2007. However, it has a hedge-fund high-on-high performance fee of 20%. I do not mind that if it is performing, and it is certainly outperforming most China indices. I am relying on Bloomberg for Atlantis' latest charges and am somewhat surprised to see that there is no front load, which is good news. However, there is a back load of 3% when it is sold. The 1% current management fee is reasonable. I do not know low long the Healthcare sector will continue to perform and I have told myself that I will at least consider selling when I see a break in the momentum move sequence of higher reaction lows. Healthcare was an inspired choice by Yang Liu, who had problems with an earlier, more general growth fund.

I also hold the GBP denominated JPMorgan China Investment Trust (JMC LN) listed in the UK. It currently sells at a discount to NAV of just over 10%. It has gone nowhere since 2010 but I rate China on valuations, as you know. Here are its largest holdings which you can check out in the Chart Library.

Obviously there are plenty of others so I am going to throw this open to the Collective of Subscribers, in case anyone wishes to mention a China fund which they rate, preferably one which invests in consumer products and services, as this would reflect the government's new priorities.

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