Analysts back move to China mandate

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Industry reaction: Baillie Gifford move could give Witan Pacific a ‘new lease of life’

Analysts back move to China mandate

David Brenchley Investment Week
23 July 2020

Investment company analysts have backed plans for Baillie Gifford to transition Witan Pacific from a region generalist to a China specific vehicle.

Witan Pacific’s board told investors on Wednesday it would sack Witan and appoint Baillie Gifford to manage the trust under the Baillie Gifford China Growth plc name, moving it to a mandate of “seeking long-term capital growth by investing predominantly in shares of, or depositary receipts representing shares of, Chinese companies”…

While analysts are generally supportive, the board acknowledged some shareholders may still wish to exit the trust, so will put forward a tender offer for up to 40% of shares in issue at a 1% discount to net asset value…

Head of investment company research at QuotedData James Carthew agreed the move was good news, noting Witan Pacific had struggled both “as a pan-Asian fund at a time when investors were keener on Asia ex Japan funds, then as a multi-manager fund that found it hard to fire on all cylinders”.

Carthew added the change to Baillie Gifford would “give [the trust] a new lease of life”. “It will be a much racier fund than it has been and investors will need to factor that into their decision about whether to take the cash option.”…

More China-specific trusts needed

Both Carthew and Parmar were also encouraged by the addition of another investment trust investing solely in China, with Carthew long having called for more funds dedicated to the Chinese market.

“[The Chinese market] has the long-term potential to overtake that of the US, and this will not be the last fund we see launched to focus on this area,” he explained…

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