After last week’s visit by the Chinese premier, Wen Jiabao, British firms breathed a sigh of relief. The new trade deal will give them greater access to the all-important Chinese markets in architecture, civil engineering and research and development. “Despite rising inflation and a slowdown in China’s rapid growth, it remains the engine of world economic growth and will be for the foreseeable future,” says Jeff Prestridge in the Daily Mail. But what’s the best way in for investors?
The Neptune China Fund, managed by industry stalwarts Robin Geffen and Douglas Turnbull, fits the bill. Turnbull believes that much of China’s growth will now come from the domestic economy rather than exports.
That is why his fund is focused on the consumer sector, with investments in everything from supermarkets to makers of rice crackers and luxury goods firms. “The China investment story is no longer dependent on the rest of the world growing,” says Turnbull in the Daily Mail. “There is massive domestic potential that will continue to fuel growth.”
The short-term performance of the fund “remains very encouraging” says Mark Dampier of Hargreaves Lansdown. It is up nearly 16% in the last year (with a total expense ratio of 1.81%). One big winner in the fund is Sands China, operator of the Venetian Macau hotel complex. It is doing very nicely out of the Chinese love of gambling. They are also keen on search engine Baidu, which is “China’s answer to Google”, says Prestridge. Every day 250,000 Chinese people use the internet for the first time and Baidu is one of the first applications they access.
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Neptune China Fund sector breakdown
| Sector | % of assets |
|---|---|
| Consumer discretionary | 30.0 |
| Industrials | 13.0 |
| Information technology | 11.5 |
| Energy | 11.1 |
| Financials | 10.6 |
| Consumer staples | 8.7 |
| Telecoms | 5.0 |
| Materials | 3.0 |
| Utilities | 3.0 |
| Cash | 2.5 |
| Healthcare | 1.6 |