Liontrust portfolio big on Chinese consumers

Liontrust’s Mark Williams will focus on a key theme of domestic demand in the Asia Income fund, which launched this week.

The portfolio has been launched with an overweight allocation to China, where Williams says both consumers and companies are well positioned to drive forward the domestic economy, supported by government policies.

Williams is overweight in low-end consumer stocks such as Yurun Food, which he says will benefit as pork prices continue to fall while demand remains strong. He is also overweight in the electrical appliance retailer Gome, as well as upmarket consumer stocks such as Emperor Watch and the casino company MGM China.

Meanwhile, the manager has gone underweight in Chinese manufacturers. “The developed world is seeing a fairly slow recovery, with negative growth in the eurozone, so we are not long on exports,” he says.

Williams is avoiding India because of the country’s structural problems. “India’s current account deficit and fiscal deficit will make it hard for growth,” he says. “It is also expensive, with valuations at a premium to the rest of the Asia Pacific region.”

The fund targets a yield of 10% above the MSCI AC Asia ex Japan index, alongside capital appreciation, and is currently expecting a yield of 4.5%.