The Luxembourg-domiciled Aberdeen Global – China A share Equity Fund will in around 25 to 30 of the 2000 companies listen on China’s A-share market, with an active focus on “long term prospects”.
The fund will be run by Aberdeen AM’s Asian Equities team, based in Hong Kong and Singapore.
Aberdeen said it aims to take advantage of a 47% boost in A-share prices at the end of last year and a deflationary pull in the country which has resulted in its lowest growth for 25 years.
It said these trends should over time lead to more market-based pricing, competition and investor transparency, and that it would have a bias towards consumer, healthcare and travel companies, where state-owned enterprises are less dominant.
Its launch comes after the company was granted a renminbi qualified foreign institutional investor licence last September, allowing it to participate in China’s mainland stock market with a minimum investment quota of RMB600m (£60m, $98m, and €77m).
Due to the currently weak reputation of mainland domestic listed companies in China, Aberdeen said its China strategy will still favour companies listed offshore.
“The new fund is a complement in that it permits investment in companies that, were it not for RQFII, would remain largely off-limits to foreigners.”
The fund will be marketed to investors in Singapore and Hong Kong, with a minimum investment of US$200k.
Other share classes will be on offer for European-based investors with a higher minimum US$1m initial investment.
Nicholas Yeo, head of Chinese equities, said: “While we are excited about its potential, China is going through a complex adjustment. A strategy of focusing on quality of growth is right but there will be legacy issues for years to come in the shape of bad debt, corporate malfeasance, and even outright fraud.
“So, with this fund, we are not saying now is the right time to buy the market, but asking investors to consider China as a long-term proposition.”
In other news, the company has purchased 180 Stratford High Street, a 26 storey residential tower overlooking the Olympic Park in Stratford, London for around £60m, marking one of the largest ever single purchases of existing stock in the private rental sector in the UK.
The company said it intends to grow its residential assets in the UK by £500m over the next five years.
It already manages around £1.2bn in residential assets outside the UK, with around half of the properties currently under development.
Gerry Ferguson, fund manager of the Aberdeen Property Trust, said: “This is the fund’s largest investment into the private rented sector and it will provide a strong sustainable income stream to the fund.”