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[Awards Q&A] Best Greater China Equity Fund - UBS (Lux) Equity China Opportunity

To help our readers better observe what makes a successful fund house, we sent out questionnaires to the winning teams earlier and asked them to shed lights on their team structure, how various risks have affected their investment decisions, and the major portfolio changes over last year, etc.

Best Greater China Equity Fund - UBS (Lux) Equity China Opportunity (USD) (SGD) P-Acc

Key Stats
Inception Date: 2013-02-08
Morningstar Rating (2020-02-29): ★★★★★
Manager: Bin Shi, Denise Cheung, Morris Wu

Q1) Can you highlight any major changes you made to the portfolio over the course of 2019? Were there any particular holding(s) or theme(s) that drove the fund’s performance for the year?

We continued to position in long term themes, such as China’s rebalancing into services and consumption, increasing share of discretionary spending and premiumization, increasing spending on R&D and technology leading to innovations and market consolidation within segments.

Q2) What are some specific opportunities you have identified for 2020, and do you expect your 2019 outperformers to persist in 2020? What are the top risk factors that could impact your portfolio, and how are you positioned to mitigate these potential risks?

The outbreak of the new coronavirus COVID-19 may be one of the biggest black swan events affecting stock markets this year. We remain somewhat cautious near term but we have cash to deploy as markets continue to fall. Whenever there is a crisis, there are new investment opportunities:

  • Ongoing industry consolidation: many smaller firms are finding it difficult to cope and will likely go out of business. Stronger and larger players are likely to benefit by growing market share
  • An offline-to-online shift across business segments: more pronounced in industries such as after-school tutoring, banking, and healthcare diagnosis; offline-only businesses are likely to lose market share
  • Investment in R&D and innovation: driven by growing demand for automated solutions, AI-driven technology, high-quality healthcare, as well as online entertainment and communication services

Q3) In which areas do you think risk is over/understated with respect to (i) the outcome of the US Presidential election, (ii) persistently loose monetary policies by major economies, (iii) Coronavirus impact on global growth, and how are you expressing these views in your portfolio?

The development on the US-China relations remains uncertain and our view is that the rivalry will run for a longer period of time. Overall we maintain our focus on long term themes, such as China’s rebalancing into services and consumption, increasing share of discretionary spending and premiumization, increasing spending on R&D and technology leading to innovations and market consolidation within segments.

Q4) How is your investment team organized? Have there been any changes to the investment team or structure over the past year? Do you anticipate adding to the team in the near future?

The team is based in Hong Kong and Shanghai and each is sector specilist. We have been adding new members to the team organically and the team has expanded 2x in the past few years to 9 members.

Q5) Where do you feel that the investment team or the investment process can be improved upon in the future?

We always look for ways and talents to improve the team or process. At this point, we believe the current team and process work well in the long run.

View all Morningstar Singapore Fund Awards 2020 articles here.

About Author  Morningstar Editors

Morningstar Editors  

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