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Jupiter launches China Sustainable Growth fund

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Jupiter Asset Management is to launch a Ucits III fund for investors seeking to gain exposure to China’s sustainable growth story.

The Jupiter China Sustainable Growth fund (Sicav), which will be managed by China fund manager Philip Ehrmann (pictured), is a sub-fund of the Jupiter Global Fund Sicav.

It will open for institutional investment on 11 December and for retail investors in the first quarter of 2010, subject to regulatory approval.

The fund will aim to achieve long term capital growth through investing in companies which will benefit from the secular trends associated with sustainable environmental, social and economic growth in China. It will focus on key growth markets within the Chinese economy such as energy, water, agriculture, transport, real estate and construction, waste management and healthcare and education.

Ehrmann says: “Although the Chinese economy was not totally immune to the recession in the West, it has accelerated strongly in 2009 with GDP growing by 8.9 per cent year-on-year in the third quarter. This was mainly the result of the quick action taken by the Chinese government and central bank relatively early on in the global financial crisis. Swift cuts in interest rates, a government induced surge in bank lending and fiscal measures worth USD586bn were all aimed at keeping the country on track for several more years of strong growth.

“I believe that the impact of these measures, including major policy reforms aimed at boosting domestic demand, and the bringing forward of already planned capital spending projects, offers an incredibly compelling investment case for the type of company we are looking to include in our portfolio. It moves us away from reliance on discretionary, cyclical spending associated with the export sector and instead allows investors to benefit from secular, long term mandated spending by the Chinese government as it seeks to develop the domestic economy.”

Ehrmann’s investment approach involves meeting companies, talking to industry experts and suppliers and using local research, before selecting individual stocks. A company’s ability to generate cash flow is essential. Although the fund is able to invest across the market capitalisation spectrum, Ehrmann’s style is to identify those companies which have the potential to become market leaders in the future, and this means a considerable investment in small to medium sized companies.

Although the fund is not intended to be a green investment vehicle, Ehrmann will draw on the insights of Jupiter’s sustainability and governance team to inform his analysis of particular businesses and industries.

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