Pictet to target “mass consumption” sectors with China-focused L/S equity UCITS
Geneva-based Pictet Funds, the fund management arm of Swiss private bank Pictet & Cie, has announced plans to launch a new UCITS fund that will aim to capture secular growth across the Greater China region. The Lux-domiciled Pictet Total Return Mandarin fund will be managed by Lan Wang Simond (pictured) using an equity L/S investment strategy. Industry figures show that China’s economy grew by 8.6 per cent in 2009. For the first half of 2010 it has grown 11.1 per cent to hit USD2.55 trillion, overtaking Japan as the world’s second largest economy, with no signs of relenting. It is on the back of this extraordinary economic expansion that Pictet hopes to lock-in returns through selective stock picking. “We aim to have 60 positions long and 30 short in the portfolio,” says Lan Wang, who goes on to explain that China’s business model is changing and moving away from a high savings, high growth model. “Structurally we expect to see higher domestic mass consumption, with export levels likely to fall,” adds Lan Wang.
The fund will focus its attention on industries in their infancy in order to invest in under-penetrated mass consumption sectors. “We’re playing the barbell strategy with domestic companies on one side and luxury niche companies in the consumer discretionary space on the other; that’s what we believe in: mass distribution and consumer discretionary,” explains Lan Wang. Asked about the fund’s expectations, Lan Wang replies: “Chinese companies are price takers not price makers. Margin is one thing, cost control another. With the fund we’re hoping to find enough companies to deliver 15-20 per cent annualized growth. The idea is to pick future national champions at their early stage and benefit from the multiple expansion as they grow to be the dominant players.” Lan Wang has over 16 years’ experience managing assets across Greater China.
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