Eurizon, the Asset Manager of Intesa Sanpaolo Group, has expanded its China capability with the launch in September, of the Eurizon Fund – China Opportunity, a mixed asset fund delegated to Eurizon SLJ Capital, the London-based asset manager of Eurizon.
It is built upon the already existing RMB bond strategy managed by Stephen Li Jen and Monica Wang, both skilled Mandarin speakers with a collective 37 years’ experience of the Chinese context and markets, combined with the Chinese equity capabilities developed in Hong Kong-based subsidiary Eurizon Capital Asia.
When compared with other major fixed income markets, Chinese bonds haven historically offered a higher yield and the RMB bond market has behaved like a safehaven asset during global risk-off periods. In times of market stress, Chinese RMB bonds have proved to be some of the best performing assets in the world. In addition, RMB bonds have helped to suppress volatility and enhance total returns when combined with other global bond and equity strategies.
The depth and breadth of China’s domestic equity market offers foreign investors diversification benefits, especially to fast growing sectors within China’s new economy. This combined with the unique influence of political, economic and monetary policies results in a unique opportunity with a low correlation to traditional asset classes.
The Eurizon Fund – China Opportunity combines the safe-haven characteristics of China’s 20-trillion-dollar bond market, with the long-term growth opportunities of Chinese equities. At launch, the fund has an 80% weight to the most liquid and highly rated onshore bonds, and a 20% allocation to equities – a blend which offers an optimal Sharpe ratio. The structural and tactical asset allocation process will be determined based on qualitative/discretionary analysis augmented by quantitative models.