First State Greater China Growth is one of our best ideas for Greater China equity exposure.
Top-notch portfolio manager Martin Lau has led this strategy for more than a decade and brings 19 years of investment experience to the table. In addition to this fund, he manages a number of Greater China and Asia Pacific mandates where he has proved to be an expert investor in the region. He is supported by a sizable Asia Pacific ex-Japan equities team that contributes to an array of successful First State Stewart strategies and is one of the best resourced teams in the region, in our opinion.
The team applies a tried-and-tested bottom-up stock selection process where it looks for companies with quality management, sustainable and predictable growth and attractive valuations. Lau invests with an absolute return mind-set and pays little heed to the benchmark when constructing his portfolio.
Therefore, sectors that are typically smaller in the benchmark may be more prominent in this fund, and vice versa. For example, the August 2014 portfolio had 10.47% of its assets in consumer staples compared with the MSCI Golden Dragon index’s 3.11%.
Lau’s investment savvy and unfaltering application of the investment process has produced an unparalleled long-term track record. The fund’s five- and 10-year annualised returns ranked in the third and second percentiles among peers respectively as of 31 August 2014. Moreover, the focus on management integrity and sustainable growth has made this one of the most resilient funds in its category during market downturns.
Further adding to its appeal, the fund has a TER of 1.83%, which is 23 basis points cheaper than the category median. All-in-all, this fund encompasses many traits that we value: a capable and long-tenured manager supported by a deep research team, a proven investment process, stellar long-term performance and competitive fees. We therefore maintain the fund’s well-deserved Gold Rating.