AIC consults on creating China and India sectors

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AIC consults on creating China and India sectors
Countries under-represented in investment company universe

David Brenchley, Investment Week, 27 November 2020

The trade body said it was currently consulting with the relevant members and their managers on whether China and India-focused investment trusts should leave the Country Specialist: Asia Pacific ex Japan sector to form their own peer groups.

Feedback from the consultation will determine whether the AIC proceeds with the proposed changes and a decision is likely to be made in Q1 2021, the AIC told Investment Week

Reaction was broadly positive, with head of PR at interactive investor Jemma Jackson noting “China and India are among the world’s largest economies, so it makes sense for each to have their own sector”…

Matthew Read, senior analyst at QuotedData, said the introduction of a China sector “would be a welcome development and has an air of inevitability about it”…

India, too, remains under-represented given its economic clout, Read added, with the country, like China, “continuing to grow in economic might and offering incredible growth prospects for investors”.

The four India-focused trusts have a combined market capitalisation of £944m, “sufficient critical mass to justify creating a separate sector”, said Read. “This would make it easier for investors to make comparisons and hopefully stimulate demand for the existing strategies,” he continued.

“However, with a natural home, a new sector could actually encourage the creation of new funds focused on the space. The prospect of more choice and better liquidity should be positive for investors, so we would welcome such a move.”…

“Vietnam is another country with a young population and excellent growth prospects that already has three funds dedicated to it,” Read reasoned. “If not now, perhaps it will not be so long before we are discussing whether it should also have a sector specifically dedicated to it.”

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