Minnow joins the big guns in China

A small, Sydney-based dealer group has done what only a handful of the global institutional managers have managed to do in Australia — launched its own China-specific managed fund.

The chair of Premium Accounting Group, which will also change its name to Premium Wealth Management, Simon Wu, has set up his own investment company to launch the fund. It will be managed by Hong Kong-based fund manager Value Partners.

The Premium China Fund will give Australian investors their first chance to access the value-styled, small caps orientated Value Partners, and joins six other China-specific funds offered on the Australian market.

Two of these are offered by AMP, with other funds available from Macquarie Investment Management, Challenger (through the division it established when it acquired HSBC’s Australian operations), Aberdeen and Fidelity, which launched its fund last month.

“[The fund] is run arguably by the best China fund house, Value Partners, is based in Hong Kong, and has an extremely good track record over 13 years,” Wu said. He added that Value Partners had returned close to 20 per cent a year since its establishment.

Morningstar Asia head of research Caroline Cheng said that, like most Chinese funds available to external investors, Value Partners invests in Chinese companies listed on foreign Asian stock exchanges like the Hang Seng, or the small number of companies listed on the two Chinese stock exchanges that are denominated in US dollars and subscribed to by foreigners.

Most companies on the Chinese stock exchange are part owned by the government, a situation Wu says causes many Chinese benchmark-orientated funds to fail.

“You see what happened to Telstra over here. You can’t make money when it compromises the political agenda.”

But Cheng said Value Partners had performed well over the last decade because of its style difference.

“They are very value-orientated with a small cap focus, that is why the stocks they pick aren’t covered by the big investment banks. Since the Chinese market started to boom in 2000 their style has faired well, and when an economy picks up the small caps will perform much better.”

Premium’s fund was placed on BT and Macquarie’s wrap products when it was launched on November 1.

Meanwhile, Premium Accounting Group managing director Helen Bridgewood said the 58 planner-strong dealer group will change its name to Premium Wealth Management to clear up confusion about its key functions.

She said the company, which was established in 2000 by 10 breakaway practices from Count Wealth Accountants, would intend to list within the next two years.