Eastspring, 'ChinaDragon A Share Fund' Achieves 6.83% Performance Since Early Year

[Asia Economy Reporter Minji Lee] Eastspring Asset Management Korea announced on the 5th that the ‘Eastspring China Dragon A-Share Fund,’ which primarily invests in Mainland China A-shares, recorded a cumulative return of 6.83% since the beginning of the year.

This fund mainly invests in a master fund that targets A-share stocks listed on the Shanghai or Shenzhen Stock Exchanges in China. The master fund has established itself as Eastspring’s flagship fund and currently has assets under management of KRW 214.6 billion (as of March 4). The fund identifies market themes such as household income growth driving China’s economic growth, expanded consumption, increased exports of technology-intensive products, and expanded infrastructure investment, constructing its portfolio around related stocks.

As of the end of January 2020, the sector allocation of the investments is as follows: Financials 25.8%, IT 21.0%, Consumer Staples 11.4%, Consumer Discretionary 11.1%, Healthcare 9.9%, Materials 6.5%, Industrials 6.1%, Real Estate 4.4%, in that order.

The Eastspring China Dragon A-Share Fund is entrusted to Eastspring Investments Hong Kong for management. The delegated manager operates the fund using advisory services provided by CITIC Prudential (X?nsh?ng J?j?n Gu?nl? Y?uxi?n G?ngs?), a related company of Eastspring based in Shanghai, China.

A representative from Eastspring Asset Management Korea stated, “We focus on discovering stocks with high growth potential and excellent corporate governance among those expected to benefit from China’s long-term economic growth. A characteristic of the fund is its flexible adjustment of weightings between stocks listed on the Shanghai and Shenzhen exchanges according to market outlook and policy directions.”

Eastspring expects that the COVID-19 pandemic will not alter the positive mid- to long-term development trajectory of the Chinese economy. While sectors such as construction, leisure, commerce, retail, and real estate may experience short-term negative impacts, other areas including pharmaceuticals, remote work, telemedicine, and gaming are expected to benefit.

Jongseok Park, Executive Director of Product Marketing at Eastspring Asset Management, explained, “The China Dragon A-Share Fund, which invests in the same master fund, has a return more than 3% higher year-to-date in the unhedged currency exposure version compared to the hedged version. Recently, the strengthening of the US dollar has boosted returns for unhedged products, and institutions are also shifting their currency hedging policies to unhedged exposure. For investors who view the dollar’s strength positively, actively utilizing unhedged products could be a good investment strategy at this time.”

This content was produced with the assistance of AI translation services.