BY KIM LEE, SENIOR FUND MANAGER
Following a May dominated by political newsflow, it was a comparatively quiet month for Far Eastern equities in June. By far the biggest announcement came on the 20 June, when MSCI finally decided to add mainland Chinese ‘A’ shares to their key emerging market and Asia Pacific indices. This followed three years during which they decided against adding them, with only overseas-listed Chinese shares (including Hong Kong) forming the Chinese allocation.
Although the stocks will only total 0.73% of the MSCI Emerging Markets Index and 0.81% of the MSCI Asia Pacific ex Japan Index, we believe this marks a key inflection point in attitudes towards China. MSCI have recognised the importance of both the Chinese economy – and its domestic companies – and we expect these allocations to gradually increase going forward.
More broadly, global equity markets struggled in June, with bond yields edging higher. Asia was more of a bright spot though, with the MSCI Asia Pacific ex Japan Index outperforming other major markets. In terms of the portfolio, we continued to reduce our exposure to the strongly performing Malaysian market, locking in some profits. More generally, we also switched out of some of the more defensive yield stocks that had risen strongly in 2017 so far, switching into more value areas such as banks and materials.
The value of investments may fall as well as rise and investors may not get back the amount invested. Currency fluctuations can also affect performance. Due to the underlying assets held, the price of the Fund is classed as having above average to high volatility.
The information contained in this document is provided for use by institutional investors, professional investors and professional advisers and is not for onward distribution to, or to be relied upon by, private investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com.
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI00840 Expiry on 15 October 2017