Equity strategy: China
A capital market with great potential
Direct access to Chinese equities and the Chinese currency
In the past, foreign investors could hardly invest directly in China due to strict capital market regulations and the corresponding capital controls. With the capital market reforms of recent years, however, more investment opportunities are opening up, and China’s weighting in the global stock indices is increasing steadily.
In 2012, Metzler Asset Management GmbH received permission from the Chinese Securities Regulatory Commission (CSRC) to invest directly on the stock exchanges in Shanghai and Shenzhen. This made us one of the first companies in Germany with a so-called "QFII license".
Since 2003, the Chinese government has opened the market for A-shares further and allowed cross-border trading of selected shares between the Shanghai, Shenzhen and Hong Kong stock exchanges. A-shares could previously be traded only by Chinese citizens.
We offer investors the following two investment vehicles to help them take advantage of these opportunities:
Metzler China Equity RMB fund
The Metzler China Equity RMB fund was launched in early 2013. It is an Irish qualified investor alternative investment fund – a so-called non-UCITS securities fund – exclusively for qualified investors.
Metzler China A Share Sustainability fund
To enable private investors to also participate in the Chinese success story, we launched the UCITS-compliant Metzler China A Share Sustainability fund on January 15, 2018 with the same investment strategy. This UCITS fund invests in Chinese equities, predominantly A-shares, and is accessible for both institutional and private investors.
Class A, ISIN: IE00BF2FJZ56
Class B, ISIN: IE000IURWYP5
Class X, ISIN: IE00BF2FK071
Local management understands the specifics
In order to gain detailed insight into the Chinese equity market and reap professional benefits, Metzler established a representative office in Beijing in 2009. In addition, we have entrusted the management of our two Chinese funds to our renowned local cooperation partner China Asset Management Co., Ltd. (ChinaAMC) in Hong Kong. ChinaAMC is a wholly owned subsidiary of China Asset Management Company Limited, the oldest asset manager in mainland China. ChinaAMC is now one of China’s largest asset managers.
The advantages for you: our local managers know the ins and outs of the Chinese capital market, have an in-depth understanding of China’s industries, and can draw on many years of experience in fund management.
The investment process
Our local cooperation partner, China Asset Management, has one of the largest equity research teams in China. More than 80 portfolio managers and analysts cover more than 2,000 stocks generally open for investing.
Our portfolio strategy follows a combined top-down/bottom-up approach. Sector allocation is based on the top-down principle, focusing on macroeconomic developments and how they are impacted by economic policy. Individual stock picking is based on thorough fundamental analysis of the target companies and their respective business environments, e.g. their suppliers, competitors, vendors and end customers, as well as the legal framework conditions that affect them.
Depending on the results of fundamental analysis and in consultation with the portfolio management team, the investment universe is reduced to around 500 stocks. Our analysts monitor these stocks continuously and, in a second step, they use a bottom-up approach to select around 200 stocks that are expected to generate substantial additional revenue for the portfolio. In a third step, portfolio managers select around 50 to 100 individual stocks from this universe to be included in the equity portfolio.
The criteria for individual stock picking include the quality of a company's products and/or services, corporate governance and management, the company’s earnings performance, long-term competitive advantages and growth potential as well as the business dynamics in the industry where the company is active.
Metzler Asset Management has been managing sustainability mandates for 20 years and became one of the first German asset managers to sign the UN PRI in 2012. In all mutual funds and in special AIFs upon request, ESG evaluation is integrated into the investment process. ChinaAMC also implements basic sustainability in its two Metzler funds. ChinaAMC signed the UN PRI in 2017 and received the Chinese award for "Best Fund Management Company for Responsible Investment" in 2019.