China has rapidly become the second-largest economy in the world and has been the key driver in global growth over the past decade, yet it remains underweight in global investors’ portfolios by nearly any measure. As China has become a larger portion of global indices, some investors have been slow to catch up to today’s global balance. We believe this slow reaction creates an opportunity for investors who are willing to lead the pack.
The opportunity comes not only from the early adoption in advance of increased global index exposure, but also from valuations today compared to global equities. This paper includes:
- Examination of what makes China a compelling, stand-alone investment opportunity in our view
- Comparison the various means of gaining exposure to China
- A look at the case for a dedicated allocation to China today
- Demonstration of why a flexible, active-management approach is an optimal method for harnessing this opportunity.