China Focus

The China Focus Equity Strategy aims to outperform its benchmark, the MSCI China Index, by at least 3% per annum over a three-year rolling period. It targets high returns and long-term capital growth by investing in a portfolio of primarily equity and equity-related securities. The strategy is able to invest in any stock whose business activity is substantially derived from China.  Holdings will tend to be a combination of A shares, H shares and Chinese ADRs. Thus, the strategy offers exposure to a broad range of Chinese companies across several markets.   

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China Focus Equity Strategy

The China Focus Equity strategy targets strong excess returns by primarily focusing on bottom-up stock selection, but with an awareness of the prevailing macroeconomic conditions.

We believe in investing in leading companies, operated by honest and competent management in industries that are structurally attractive. This gives the portfolio a growth and quality focus. However, we are firm believers in the concept of intrinsic value and retain a strong valuation discipline.

As the investment philosophy focuses equally on quality, growth and valuation, the portfolio does not have a significant style bias. It is expected to typically demonstrate higher earnings growth, higher dividend growth, superior ROE, and less leverage than the index. These attributes are expected to be achieved whilst maintaining a valuation similar or cheaper than the MSCI China index as a whole.

Portfolio construction is the synthesis of idea generation, conviction and risk management. The strategy will typically hold 30-35 stocks, and aims to have an active share that is consistently well above the median of our peers.

The following aspects of our investment process provide an edge and set the TT proposition apart from the competition:

  • This is a high conviction, focused portfolio, with an unconstrained investment universe that enables us to buy the most attractive Chinese companies wherever they are listed.
  • The strategy aims to offer superior returns by investing in higher qualityhigher growth companies on attractive valuations with positive earnings and share price momentum. It has a strong valuation discipline, with a particular focus on free cash flow.
  • The strategy targets long-term structural growth themes within China such as innovation and premiumisation.
  • Our highly experienced investment team speak both Mandarin and Cantonese. Based in Hong Kong, they have monthly research visits to the mainland to meet companies and utilise TT’s panel of expert networks for additional on the ground expertise.
  • Unlike many traditional long-only managers, TT’s hedge fund heritage ensures that our risk management capabilities are outstanding and thus are able to play an important role in the investment process.
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