AXA Investment Managers, as part of a joint venture with Shanghai Pudong Development Bank, has introduced a new strategy that invests in small and mid-cap Chinese companies to offer investors access to long-term Chinese growth.
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Dubbed AXA SPDB Chinese Equity A-Shares, the new strategy will be managed by a team of eight portfolio managers led by Wendy Luo, and will be supported by nine analysts.
The stock selection process is based on a dynamic factor model, while factors in the model are adjusted on the basis of a qualitative macro outlook for the market cycle. The strategy involves monthly rebalancing.
The firm has already secured a Qualified Foreign Institutional Investor (QFII) licence to invest into the China A-shares market. It has also got a quota allocation under the QFII scheme.
Luo said: "The strategy is biased toward small- and mid-cap companies in industrial, service, IT, healthcare, and consumption sectors rather than financials and energy, as we believe they offer higher growth prospects on sound fundamentals.
"In such a liquidity-driven market as China, growth companies at a reasonable valuation should be our focus. These companies are, in our view, in the sweet spot to benefit from the transition to a ‘new normal’ economy."
The Axa SPDB joint venture was founded in 2007 and currently manages 20bn (£14.9bn) in assets.
