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Vanguard
Vanguard, the US asset management house, has started the process of rolling out a stock fund investing in onshore and offshore Chinese equities.

The firm has filed an initial registration statement with the US Securities and Exchange Commission to introduce Vanguard China Select Stock Fund. Vanguard said that the fund, which it expects to launch in the first quarter of 2022, is pitched at clients seeking actively managed, high-alpha-target equity exposure..

“Vanguard research indicates that there is an opportunity for talented active managers to generate alpha in China’s large, but inefficient, equity market.” Kaitlyn Caughlin, head of Vanguard Portfolio Review Department, said.

At a time when investing in Chinese equities is controversial amid US-China tensions over trade, geopolitics and regulatory moves by Beijing, Vanguard insisted that exposure to China is an “important part of both the equity and fixed income allocations of a globally diversified portfolio.”

“China is a significant and growing portion of the global equity market, representing the second largest nation by GDP output and the third largest country by market capitalization,” it said in a statement.

The fund intends to beat the MSCI China All Shares Index and have estimated expense ratios of 0.83 per cent for Investor Shares and 0.73 per cent for Admiral Shares, compared with an average expense ratio of 1.14 per cent for competing funds, it said. The fund will be co-managed by Vanguard fund advisors Wellington Management Company and Baillie Gifford Overseas.