In March 2020, NN Investment Partners (NN IP) and its strategic partner China Asset Management Co. Ltd. (ChinaAMC), have together launched its inaugural ESG-integrated China A-Share Equities strategy. The NN (L) International China A-Share Equity fund targets both institutional and wholesale investors. The current market developments underline the importance of integrating Environmental, Social and Governance (ESG) factors more than ever, making the fund well positioned to leverage on this opportunity in the Chinese market.
NN IP signed a Memorandum of Understanding (MoU) with ChinaAMC in April 2018, to explore joint product development opportunities and consequently leverage on each other’s capabilities and strengths in the European and Chinese capital markets respectively, in addition to NN IP’s Responsible Investing experience. The MoU was signed to strengthen NN IP and ChinaAMC’s ESG offerings to global clients. The new fund is the first product launched jointly, in line with this intention.
The NN (L) International China A-Share Equity fund provides additional alpha potential for Chinese A-shares as they become more mainstream and grow in popularity. Chinese A-shares are now part of specific benchmark indices and it is becoming easier for foreign investors to enter the Chinese markets via access programmes such as Stock Connect. This fund will benefit from NN IP’s Responsible Investing expertise and ChinaAMC’s fundamental research, security selection and engagement efforts in China.
Twan Philipsen, Head of Partnership Relations at NN Investment Partners: “We are proud to work together with ChinaAMC and to have launched a product that enables our clients to access the Chinese equity markets whilst at the same time retaining a high standard of ESG integration. At NN IP, Responsible Investing is at the core of our investment processes. We will continue to look for opportunities to expand our offering of responsible solutions in close collaboration with our partners.”
Richard Pan, Head of Global Capital Investment at ChinaAMC: “Local expertise and disciplined investment process can help global investors to navigate investment opportunities in the second largest equity market in the world. Our close collaboration with NN Investment Partners upgrades our joint ESG analysis in evaluating Chinese companies’ long-term sustainability and potential risks.”
The new fund consists of a diversified portfolio of equities issued by companies based in, or having a significant exposure to, mainland China. Portfolio construction and security selection are based on a fundamental view of the equity markets, while incorporating ESG criteria. The fund will mainly invest in China A-Shares listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange.
ChinaAMC is responsible for the daily portfolio management of the new fund, whilst NN IP provides advice and research on ESG integration, Active Ownership activities, and global Responsible Investing Developments. These insights come together in a joint responsible investing council, which reflects on ESG criteria and its implementation to provide guidance on the construction of an eligible investment universe, and monitors progress and RI developments regarding ChinaAMC and NN IP collaboration and related ESG investment products.
The NN (L) International China A-Share Equity is a sub-fund of NN (L) International, established in Luxembourg. The NN (L) International China A-Share Equity fund is duly authorised by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. Selected share classes of the sub-fund are currently registered in Luxembourg and the Netherlands.