Like many new launches, advisers were wary of the Jupiter China Fund when it came to market in October. “Thumbs down, for now,” said Gary Potter, manager of Credit Suisse Multi-Manager Emerging Markets in The Times. The fund had no track record, so investors were advised to wait a few months until it had established one. Nine months on, it’s proved itself. Returning over 60%, manager Philip Ehrmann has shot his fund to the top of the Asia ex-Japan fund league tables.
Some warn that the strong performance can’t continue – critics argue that a slowing US economy will hurt China as demand for cheap Chinese products wanes. Ehrmann agrees on this point, telling Fund Strategy that “I have not been buying exporters”. Instead, he has focused on domestic demand, investing in mid-cap stocks that are set to benefit from the country’s growing middle class. “The Chinese industrial revolution has only just begun. There are 700 million people still living in subsistence,” he points out. As their lives improve, he expects stocks such as Ajisen, a fast-food restaurant chain, to benefit. He also likes CC Land, a property firm with holdings in the cities of Chongqing and Chendu. The centre of China’s coal-mining industry, planners want to turn the area into a Chinese Chicago, opening the west to investment. It looks attractive on a p/e of 5.5.
“With earnings growth in excess of 20%, Jupiter’s Chinese portfolio looks good value,” says Hargreaves Lansdown’s Mark Dampier. And investors need not fear the bubble in local Chinese markets, as the fund invests mainly “via the Hong Kong market… where valuations have remained more realistic.”
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Jupiter China Fund top ten holdings
Name of holding, % of assets
CC Land Holdings Ltd, 3.37
Ajisen (China) Holdings Ltd, 3.11
Neo-Neon Holdings Ltd, 3.02
Maanshan Iron & Steel Co, 3.02
Midas Holdings, 2.67
China Construction Bank, 2.65
Lee & Man Paper Manufacturing, 2.62
Simcere Pharmaceutical Group, 2.61
Sino-Environment Technology, 2.49
Minth Group, 2.42