First State Greater China Growth Class A Accumulation

The First State Greater China Growth Fund has been removed from the Wealth 150 list of our favourite funds in each sector.

From 1 January 2012, First State is no longer seeking new investments into this fund. They have seen strong inflows into a number of their specialist Asian and emerging market funds over the last couple of years, helped by the team's excellent long-term track record. First State now believes this fund is at an optimum size and if it grew significantly bigger, future performance could potentially be compromised.

We view this as a positive move for existing investors in this fund. Smaller funds will generally be more nimble, allowing the managers to react quickly to market developments and take advantage of opportunities when they arise. It also allows this fund to continue investing in smaller companies, which have the potential for superior growth although they are higher risk. If this fund continues to see large inflows of capital, it could make it more difficult to manage.

The long-term performance of First State's Asia and emerging markets team has been strong, and we believe the restriction of inflows into this fund should help the manager outperform in future. This restriction does not currently apply to the First State Asia Pacific Leaders and First State Global Emerging Market Leaders Funds. As these funds do not invest in smaller companies, they do not face similar liquidity constraints and remain open for new investments.

We believe existing investors do not need to take any action if this fund still meets their objectives. Those investing monthly through the Vantage Service will be able to continue doing so and receive a full 4% saving. If our views change, we will keep investors informed.