FSSA Greater China Growth – fund manager change

The fund aims to deliver long-term growth by investing in companies based in, or conducting most of their business in, China, Hong Kong or Taiwan.

We’re disappointed to see Lau step back as the fund’s lead manager. He’s an investor we know well and has a strong track record of investing in China, having managed this fund since launch in 2003.

The new manager

We’re pleased to see continuity in the team with the experienced Lau remaining as co-manager. He’ll remain a key contributor to the team’s research of Chinese companies and continues to manage other funds that invest more broadly across Asia, such as the FSSA Asia Focus fund, which is also on the Wealth Shortlist.

We believe Chen has the relevant experience to manage this fund. She joined FSSA in 2012 and has developed as an investor under the guidance of Lau and other experienced members of the team. She has been the lead manager of the FSSA All China fund since 2019 and became lead manager of the FSSA China Focus fund in 2020.

Since Chen took over the FSSA All China fund in July 2019 it has grown 2.01%*. This is ahead of the MSCI China All Shares benchmark, which returned -1.55%. During her time as manager of the FSSA China Focus fund, it has returned -12.84%. This is slightly behind the MSCI China benchmark, which fell 8.40%. Our analysis suggests that the manager’s stock selection - the ability to invest in companies that go on to perform regardless of which sector they operate in – has been the driver of performance. As always, past performance isn’t a guide to the future.

As with any fund manager change though, there will be changes to the way the FSSA Greater China Growth fund is managed. Chen’s other China funds have tended to be more volatile (experience more ups and downs) and perform better than the broader market when it’s rising but not hold up as well when it falls.

The Greater China Growth fund has tended to take a more conservative approach. We therefore expect the fund to be more volatile under the leadership of Chen but still expect her to use the same broader investment philosophy and process that has been used by the team over many years. We’ll continue to monitor the fund closely to ensure it performs in a way we expect.

Investors should also be aware that investing in emerging markets and a fund that invests in a single country is a higher-risk approach. Periods of volatility should be expected, so a long-term outlook is essential.

Chen will continue to work closely with Lau and learn from his experience, which we view positively. That said, Lau will no longer be the final decision maker on which companies make it in and out of the fund – this will rest with Chen. While she’s built her own track record, it’s shorter than Lau’s, so we’ll monitor her decisions and any changes to the fund closely.

We have recently met the managers and will meet Chen again in the coming months. As always, we will keep investors informed if our views change or if we think the fund’s investment style is starting to evolve.

This isn’t a recommendation to make any changes to a portfolio. Investors should make sure any investments match their investment goals and attitude to risk. If you're not sure if an investment is suitable for your circumstances, please seek advice.