FSSA Greater China Growth: April 2026 fund update

• Helen Chen took on the role of lead fund manager in 2025

• We like the culture at FSSA – the managers view themselves as stewards of investors’ capital and look after it as if it were their own

• Fund performance has been weaker compared to its benchmark recently, but has done well over the long term

• This fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

FSSA Greater China Growth aims to deliver long-term capital growth by investing in companies based in, or conducting most of their business in, China, Hong Kong, or Taiwan. The team’s investment approach means we typically expect more stability in returns compared with the broader market and peers in the IA China/Greater China sector, though any investment in China should be expected to be volatile.

We think the fund could form part of a broader global investment portfolio or diversify other investments in Asia and emerging markets. China has long-term growth potential, but a fund focused on a single emerging country is a high-risk option so investors should expect volatility and it should only make up a small part of an investment portfolio.

Manager

Helen Chen joined FSSA in 2012 and became lead manager of this fund in March 2025. She was previously appointed co-manager in July 2019 and has continued to develop as an investor under the guidance of Martin Lau, previous lead manager of this fund, and other experienced members of the team. Chen also manages other funds that invest in China. They invest in a similar way, with many companies forming parts of all her funds, so we’re comfortable this is a manageable workload.

Lau was lead manager of this fund from its launch in 2003 before stepping back to his current role of co-manager when Chen became lead. Lau is a highly regarded fund manager and has invested across Asia for more than two decades, with a particular focus on China, an area he specialises in. While Lau will continue to work closely with Chen, he’s no longer the final decision maker on which investments the fund makes.

The managers are supported by a diverse team who all follow the same investment philosophy. They all contribute investment ideas and provide important challenge before any investment is made.

Process

FSSA’s philosophy centres around ‘quality’. The definition of quality is subjective but Chen and the FSSA team believe that each company’s management is the most important aspect. That’s why they try to find companies run by reputable management teams that don't take unnecessary risks in pursuit of short-term gains.

Their process hunts for businesses that have the potential to grow earnings steadily over the long run. This means they should have a competitive advantage that others struggle to replicate, such as a well-known brand or the ability to raise prices for their products without affecting demand from customers.

The managers’ high-conviction approach means the fund can look very different to the broader market (its benchmark). Technology businesses are the largest allocation in the fund at 33.2%, although this is less than the benchmark. The fund currently invests more than the benchmark in consumer cyclical companies, which are typically more sensitive to the wider economy, and industrial companies.

Most of the fund invests in Chinese companies. Investments in Taiwan currently comprise a third of the fund, however this is less than the benchmark’s 43% allocation. While the fund mainly invests in larger companies, it can also invest in some higher-risk smaller companies.

When making any investment, the managers take a long-term view and so they don’t tend to make too many changes from year to year. They often sell shares in companies that have performed well and could have less room to grow in future while buying more shares in companies that have been weaker but still have growth potential. Chen has made some changes to the fund since becoming lead manager though. A number of these changes are in the technology sector, where she’s invested in Taiwanese companies Quanta Computer and Tripod Technology. Investments were also made in leading Chinese battery manufacturer CATL and e-commerce business PDD.

Culture

We like the culture and philosophy at FSSA, which forms part of the broader First Sentier Investments group. The team is made up of investors dedicated to looking after clients' money as if it's their own.

FSSA places emphasis on recruiting and maintaining great people. Every team member is an advocate of the overriding philosophy and they're encouraged to bring their own ideas to the table.

First Sentier Investments was acquired by Mitsubishi UFJ, a Japanese bank, in 2019. Takeovers can sometimes lead to disruption and corporate change, though positively FSSA remains an independent investment team.

Beginning in 2025, fund managers have the option to own a share of the FSSA business. We’re pleased that many of the team, including Chen, took up this opportunity to commit to the business for the long term.

In November 2025 FSSA took over the management of funds previously managed by sister company Stewart Investors. The direct impact on Chen is limited as Stewart Investors didn’t manage any funds invested solely in China, but we’ll continue to monitor these changes for any impact on the wider FSSA team.

ESG Integration

For the team at FSSA, environmental, social, and governance (ESG) considerations are much more than a label or box to be ticked. Taking these factors into account is a natural extension of the same investment process they’ve used for decades. The team’s philosophy is founded on stewardship – when they make an investment, they see themselves as part-owners of the business and want to make sure it’s run in a way that benefits all shareholders.

ESG issues form a core part of this. For example, they don’t like companies that make reckless decisions in the pursuit of short-term gains, rather than focusing on longer term growth. A business shouldn’t exploit its workforce, take advantage of tax loopholes, or skirt around industry legislation. Importantly, it should cause little, if any, harm to the environment around it. FSSA has made a firm-wide commitment not to invest in companies whose primary business is tobacco products or controversial weapons.

The team also engages closely with each company’s management. It helps them make sure management remain on track with sustainability initiatives and means they can encourage a change in behaviour if required. If they don’t think a business meets their standards, or isn’t doing enough to address a problem, they won’t invest.

The firm produces an annual Responsible Investment report and a Stewardship report. These reports outline the firm’s voting record, provide engagement updates and case studies, and present additional ESG-focused research.

While the FSSA team integrate ESG risks into their company assessments, this fund doesn’t have a sustainable mandate.

Cost

This fund has an ongoing annual charge of 1.09%, but we’ve secured a discount for HL clients of 0.05%. This means you will pay a net ongoing charge of 1.04%.

The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee of 0.35% per year will also apply, except in the HL Junior ISA, where no platform fee applies.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes.

Performance

Since Chen became the fund’s co-manager in July 2019, it’s returned 23.60%*. This is less than the MSCI Golden Dragon benchmark, which rose 51.64%, but ahead of the IA China/Greater China sector, where the average fund returned 9.48%. Investors should note that most of this performance is attributable to Martin Lau and his tenure as lead manager. Past performance isn’t a guide to the future.

Most funds in the IA sector have struggled against the benchmark because of the way it’s constructed. Taiwan Semiconductor Manufacturing Co (TSMC) makes up 25.52% of the MSCI Golden Dragon benchmark, however funds in the IA sector are limited to a maximum investment of 10% in any individual company. While TSMC is one of the fund’s largest investments, the managers can’t invest as much as what’s in the benchmark, which means it hasn’t benefited as much from the company’s recent strong performance.

Quality investing, the style used by the fund, has also been out of favour recently. This was another headwind to the fund’s performance. Sectors which are typically more sensitive to the wider economy, such as banks, have performed well. Chen and the FSSA team don’t often invest in these types of companies as they don’t believe they provide the same long-term growth opportunities as quality companies.

Over the past year, some of the fund’s investments in technology companies also detracted from performance, including MediaTek and Silergy. Both companies design and manufacture components for products such as smartphones. While the technology sector has performed strongly over the past year, returns were driven by positive sentiment towards adoption of artificial intelligence (AI). As such, companies not directly involved in the supply chain, such as MediaTek and Silergy, didn’t perform as well. Chen maintains a positive long term view of both companies.

Investments that worked well for the fund over the past 12 months include Chinese hotel group H World, Hong Kong-based insurance company AIA Group, and technology company Delta Electronics.

If the benchmark remains concentrated and quality investing remains out of favour, the fund may continue to not perform as well as the benchmark. However, the opposite is also true and over the longer term the fund has performed better than most of its peers.

As with any investment in emerging markets, investing in China can be more volatile than investing in developed markets. Chen and the team try to take a more conservative approach in managing the fund, which means it could lose less than other China funds in a falling market. They do this by investing in companies they think will see consistent demand for their products or services and prosper over the long term. This means the fund has tended to hold up relatively well when markets have been weaker, but lag when markets have risen strongly.

Investors should be aware that, as the fund also invests in Taiwan, it can often perform differently to the wider sector, where most funds invest only in China. When China is performing well the fund may fall behind peers, although the opposite is true when China doesn’t perform as strongly.

We continue to believe that Chen and the team have the potential to perform well for investors taking a long-term view, due to a robust and longstanding investment process that has been used successfully for many years.