CF Canlife Asia Pacific Fund Update

china tightening

BY KIM LEE, SENIOR FUND MANAGER

Much like November, Asian markets traded in a narrow range in December and were broadly flat in sterling terms. This was largely because the Chinese government continued to tighten policy at the margin, whilst investors also took profits in what has been a strongly performing market in 2017. For example, what many investors do not realise is that fund managers in China must realise their profits for it to count towards their calendar year’s performance figures. This causes a number of the most popular stocks to be net sellers in December, putting some downward pressure on the market.

During the month we continued to reduce our exposure to China, switching into more defensive, value plays, particularly in companies based in the ASEAN (Indonesia, Malaysia, Singapore and Thailand) nations. This is because monetary conditions are tightening globally, demonstrated by the most recent interest rate hikes from the US Federal Reserve as well as People’s Bank of China. Higher rates tend to benefit the more value parts of the market.

Looking forward, we expect to maintain this positioning in the short-term, whilst also maintaining a small cash weighting. However, we are looking to re-build our position in China and sectors that have had a decent correction.

Important Information

Past performance is not a guide to future performance. 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 investment professionals and is not for onward distribution to, or to be relied upon by, retail 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 should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views 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.

CLI01072 Expiry on 15 April 2018

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