Fund Profile

Disclaimer

This is a non-independent marketing communication commissioned by abrdn. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
A new version of this profile is available. View Latest
Overview

abrdn China (ACIC) was restructured in November 2021 and given a new mandate under a new investment team headed by Nicholas Yeo. Previously known as Aberdeen Emerging Markets, the new strategy and portfolio have quickly been established to take advantage of a key megatrend in the world’s most populous country. Rising aspiration, digitalisation, environmental awareness, health and wealth effects are seen by the team as key drivers of China’s transition to a consumer economy. Nicholas and the team have created a high conviction portfolio by taking an assertive stance in stocks they believe are well-positioned for this transformation and will deliver long-term capital growth for investors.

In our recent meeting, Nicholas cited several key advantages the team has in being able to deliver for investors. These include a large team on the ground in China and Hong Kong, accessibility to company management teams and expectation of a Qualified Foreign Institutional Investor license which opens up a bigger investment universe. A long-term buy and hold approach, acting more as owners of businesses rather than just investors, and a strong focus on ESG matters are also expected to bring advantages, with high-quality companies finding their way into the portfolio.

With a long-term capital growth objective, the trust is likely only to pay a token annual dividend. ACIC’s discount to NAV has narrowed since the restructuring despite the weakness of the Chinese equity markets. The trust currently has a net cash position but has recently arranged Gearing facilities which could see it take on debt over time.

Analyst's View

ACIC is a welcome addition to the Chinese equity investment trust sector. China is the world’s second-largest economy with the second-largest market capitalisation. While the trust is new to just focussing on Chinese equities, the management team is not, but is a large team of specialists with many years of experience. In the long term, we think having a rigorous and repeatable process increases the chance the trust will deliver alpha, and the focus on ESG is another potential source of returns.

There are a number of hurdles to overcome in the short-term, but the recent weakness in the Chinese market could be an opportunity: the MSCI China All-Share Index is showing a 2022 forward P/E ratio of 10.7x while the MSCI World and MSCI Emerging Markets are trading at 16.8x and 11.8x respectively (according to Bloomberg). However, there is a reason for the weakness, and there is likely to be a tussle in the short term between value and growth styles. In this regard the team are maintaining a degree of caution by taking a barbell approach with a balance between value and growth stocks. In line with their long-term strategy, they view this weakness as an opportunity, and are looking to buy quality companies on the dips.

While the Chinese market is volatile, it provides a good degree of diversification from developed markets. As the short-term clouds of the pandemic and Ukraine war lift, the reopening of the economy, stimulus policies and transition to a consumer economy over the long term could provide a firm base for investors seeking capital growth with ACIC worth considering for a well-structured and diversified portfolio.

Bull

  • Locally- based management team with extensive experience of Chinese equities
  • Aligned to long-term structural drivers of economic growth in China
  • High conviction portfolio, not a benchmark hugger

Bear

  • High single country risk, including political and regulatory risk
  • Chinese markets are highly volatile
  • Trust may use gearing which could amplify losses
Continue to Portfolio

Fund History

25 Aug 2023 Is China a value play?
Almost all Asia managers are underweight the world’s second-largest economy...
23 Aug 2023 Halfway there…investing on a prayer
We provide an update on our picks for 2023 and see which analysts' prayers are being answered…
03 Jul 2023 Fund Analysis
Chinese growth equities look cheap, yet are delivering strong earnings growth…
30 Jun 2023 High end China
Several managers are investing in higher-end consumer growth in the world’s second-largest economy…
29 Mar 2023 Podcast: Trust Issues #13 - Finding the best growth stocks in China, with ACIC Manager Elizabeth Kwik
It's been an interesting start to life for the trust, which was launched in late 2021...
25 Jan 2023 The toad to recovery
Two of our analysts debate the outlook for China in 2023…
04 Jan 2023 Here we go again
We review our ‘top picks’ for what was a wild year and place our bets for the year ahead – which doesn’t look much calmer…
09 Dec 2022 Fund Analysis
Unjustifiably poor sentiment and a change in the lockdown stance could be the spur for China and ACIC…
13 Jul 2022 Ready player one
We wonder where, if anywhere, should investors look for returns after a tumultuous first half of the year…
25 May 2022 Bull in a China shop
Chinese stocks are looking cheap, and we argue that now may be a good time to allocate more to China for the long-term...
04 May 2022 Fund Analysis
ACIC is a new strategy aligned to China’s long-term growth potential...
04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
25 Mar 2022 Slides and Audio: abrdn China
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 16 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.