E.I. Sturdza Strategic Management Limited
EI Sturdza Strategic Management Limited: EI Sturdza Investment Fund: Lilian Co, Portfolio Manager of the Strategic China Panda Fund, sees further upside for Chinese equities in 2018
DGAP-News: EI Sturdza Strategic Management Limited / Key word(s): Funds Press release – Increasing consumption and a growing middle class are expected to be supportive of equity investments – Strategic China Panda Fund (USD Class) returned 63 percent in 2017 – The strong return in 2017, pushed the Fund’s relative outperformance of the benchmark since inception to 111 percent – The Fund’s portfolio is currently being focussed towards themes / sectors that have high levels of growth momentum, such as Consumer Discretionary, IT and materials – Lilian Co expects growth in China to moderate in the coming years; however still to be in excess of other global markets and that 2017 represented a “revision to mean” given that valuations came into the year at depressed levels
Lilian Co believes that the negative effects of the reforms within the Chinese markets are now reaching an end and that the Chinese companies have been able to demonstrate their strength as a result of a corporate earnings recovery, attributable to structural changes which have been implemented, rather than a cyclical upturn. From a longer term and macro economic point of view, Lilian believes that; China remains underweight in the majority of international investor portfolios, that China continues to strive to open its markets – which will have a long term beneficial impact and that the market will become increasingly interesting to foreign investors once attention refocuses on corporate earning growth, rather than a pure “China” macro / cyclical view. Attractive investment opportunities in 2018 Chinese and Hong Kong consumers are adjusting their focus, now considering both a products quality, as well as cost, a transition from a mind-set which has been maintained over the past few years, which was solely focussed on the perceived value of goods. In addition to the manufacturers of consumer goods, the IT and automotive industries will also benefit from this structural trend. As such the shares of Chinese suppliers to these industries that have refocused on “quality” are expected to enjoy strong growth. Significantly higher than average performance The Strategic China Panda Fund, which launched on the 3rd October 2008, has returned over 255 percent to investors (as of 31 December 2017), representing a relative outperformance of its benchmark, the MSCI China NR USD of 111 percent. This translates to an annualised return for the Fund of approximately 15 percent, compared to 10.2 percent for the benchmark. The Fund’s compelling risk/return profile has been recognised by Morningstar who have awarded it a 5 star rating over 3 years. Further Lilian is AA rated by Citywire. High-tech and Consumer Discretionary stocks are favoured in 2018 As at the end of December 2017 the Fund held 41 stocks, with the largest exposures being to the Consumer Discretionary sector (38.10 percent +28.73 percent on a relative basis) and materials, whilst being notably underweight Financials (-13.34 percent) and IT. Whilst IT is underweight on a relative basis, this remains the Fund’s second largest exposure at the sector level, representing 33.42 percent of the portfolio, with 4 of the top 5 holdings being within the sector, with Tencent remaining the Fund’s largest position, followed by Alibaba and Sunny Optical. High conviction themes, which supported the Fund’s performance in 2017, remain top allocations for the Fund as we move into 2018. “We are taking a very positive view of the Chinese equities market. Our favourites for 2018 continue to be IT stocks and the non-basic consumer goods sector. We regard periods of weakness as being an opportunity to buy, as fundamental Chinese data continues to remain intact and the price/earnings ratio of 13 is reasonable”, explains Lilian. In terms of the Fund’s consumer discretionary exposure, Lilian states that “this overweighting is due to the growth I have already mentioned in the Chinese middle class, and also their readiness to pay more for quality products”. In terms of market capitalisation, the portfolio has a large cap bias to stocks with a capitalisation of more than USD 5 billion, which represented 82 percent of NAV as at the end of December 2017. Exposure to mid and small cap stocks stood at 10 percent and 8 percent respectively by contrast. The team continue to look for growing companies which are trading at reasonable prices, looking to capitalise on mispricing opportunities, studying earning forecasts, which they believe can provide indicators of potential opportunities when they differ from the market consensus. This is then combined with a fundamental bottom up stock selection process and results in a concentrated portfolio of between 30-45 stocks, taking active single stock and sector bets. Interest in A shares expected to increase Portfolio manager Lilian Co has more than 20 years of experience in the investment industry, focusing on Asian equities. About E.I. Sturdza E.I. Sturdza Strategic Management Limited (EI Sturdza) was formed in November 1999 and forms part of the Eric Sturdza Banking Group which is headquartered in Geneva. In total the group manages approximately USD 10 billion, of which USD 4 billion is attributable to EI Sturdza. EI Sturdza is responsible for the group’s fund activities, and bases its work on exclusive alliances with select portfolio managers who are all leaders in their sector and have solid, long-term track records. EI Sturdza provides its portfolio managers with an extensive infrastructure, which allows them to focus purely on portfolio management. You can find more information at www.eisturdza.com DISCLAIMER Source: NAV & Performance – Morningstar, Allocation – Bloomberg, Index – MSCI (c) 2018 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar Rating past performance is no guarantee of future results. For more detailed information about Morningstar Rating, including its methodology, please go to: http://corporate.morningstar.com Source and copyright: CITYWIRE The Ratings are based on the Manager’s three year risk-adjusted performance to 30/11/2017. Citywire information may not be copied and Citywire excludes any liability arising out of its use. Copyright Morgan Stanley Capital International, Inc. 2018. All Rights Reserved. Unpublished. PROPRIETARY TO MORGAN STANLEY CAPITAL INTERNATIONAL INC. edicto GmbH
15.02.2018 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |
Language: | English |
Company: | EI Sturdza Strategic Management Limited |
Sarnia House, Le Truchot | |
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Phone: | +44 1481 722 322 |
Fax: | +44 1481 710 884 |
E-mail: | info@eisturdza.com |
Internet: | www.eisturdza.com |
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