Sheridan Admans, investment adviser at The Share Centre, explains why investors may wish to consider exposure to China and how the First State Greater China Growth fund is well placed to offer this.
"China has been tightening monetary policy for some time and we are of the opinion that this is now drawing to a close. With the Hang Seng index trading on a PE of 9.75, valuation looks extremely attractive, even more so than back in June when it was trading at an attractive 12 times PE, and now could be a good time for investors to venture back in to this market.
"Since the recent market sell off, a lot of funds exposed to China are trading at valuations near to where they were pricing 12 months ago.
"However, uncertainty in Europe is still likely to affect global markets and concerns over the US slipping back in to a recession are at the forefront of investor's minds. This is likely to have some impact on sentiment for Chinese growth. It has already started to raise concerns over the growth prospects for Hong Kong, as speculation increases that it could slip into a recession due to weaker global growth.
"We suggest investors drip feed in to the First State Greater China Growth fund over the long term as we believe the potential for growth in China remains very attractive."
"The First State Greater China Growth fund, managed by Martin Lau and Hsiu-Mei Ho, is our preferred fund with exposure to this region. We like it because of the conservative low risk approach they take to investing in a low risk market. Also, its managers and analysts are involved with the participants of these markets on a daily basis.
"The fund invests in approximately 65 - 80 companies, favouring large caps but with some exposure to small and mid caps. Ideally companies are held for the longer term, reducing portfolio turnover.
"As of 15/8/2011 over five, three and one year periods, as well as over six and three months, the fund on a cumulative basis has been a 1st quartile performer."
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