James Carthew: Do not neglect China trusts in your portfolio
The US no longer holds the global monopoly on technology, and low valuations in China could pave the way for plenty of upside ahead.
I recently went along to a private investor forum organised by Baillie Gifford, where representatives of its China Growth (BGCG) and US Growth (USA) trusts make a short presentation and answered audience questions. One of these was: why bother with country/regional funds when Baillie Gifford has the likes of Scottish Mortgage (SMT) and Monks (MNKS) available?
The obvious answer is that many investors want flexibility to tilt their portfolios to particular geographies or sectors. The BGCG presentation underscored why that might be desirable, with the statistic that China represents 18% of global GDP yet just 3% of the MSCI All Countries World index.
There is also a good argument that the country/regional funds have a greater flexibility to hold smaller companies. Globally, small cap may be lagging large cap, but that will not always be the case.
The aim of the event was not to present this as a battle for investors’ attention between the globe’s two largest economies, but it did feel a bit like this…. read more here