Foreign investors’ access to the Chinese equity market has been primarily through overseas listings, called H-shares. A-shares, which are listed onshore and have historically been reserved for domestic investors, are now being granted foreign access through the licensing framework of the RMB Qualified Foreign Institutional Investor (RQFII) program for qualified institutional investors, and more recently through the less-restricted Shanghai and Shenzhen Stock Connect mechanisms.
“This strategy highlights Acadian’s ability to manage the unique risks associated with the A-Shares asset class, such as volatility spikes and market interventions, as we continue to expand our global reach and add to our offerings in emerging markets,” said portfolio manager Asha Mehta. “The A-Share universe materially broadens our opportunity set. It is also a much less efficient segment of the equity universe and thus potentially very rewarding for a disciplined and structured approach to investing. As this market expands, we believe there is a robust opportunity for alpha generation and data analysis.”
As the Chinese equity market has developed over the past two decades, so too has data availability and quality, which may provide information on various metrics such as price, valuation, and earnings. Acadian’s quantitative investing approach covers the approximately 3,500 A-Shares listed companies.
China’s equity market is one of the world’s largest and most liquid, reflecting the economic and financial strength that China has achieved in recent decades. Recent reforms to this market have begun to provide the access foreign investors require. The recognition of this by index providers means that investment capital is likely to continue to flow into China from around the globe.
“We’re in a strong position to be able to leverage our expertise in quantitative investing and experience with emerging markets to provide our clients with this opportunity to invest in onshore China,” said Ross Dowd, Co-Chief Executive Officer at Acadian. “We believe China will play an increasing role in our clients’ portfolios. The launch of the China A-Shares Strategy is the next step for us in terms of strategy development and a testament to our continued effort to support our clients’ needs.”
Mrs. Mehta is a Portfolio Manager on Acadian's quantitatively managed strategies. Her thematic focuses include Frontier Emerging Markets, Emerging Markets Small-Cap, and Sustainability Investing.
About Acadian Asset Management LLC
Acadian Asset Management LLC invests on behalf of institutional investors such as pension funds, endowments, governments and foundations, as well as individual investors. As of January 31, 2018 the firm managed over $103 billion. The firm uses an innovative array of disciplined, quantitative investment techniques and analytical models for active stock selection as well as country, sector and currency valuation. Acadian’s strategies include managed volatility, emerging markets, global equity, small-cap, long/short, market neutral, and non-US equity strategies. For more information on Acadian, please visit www.acadian-asset.com.