Market Access Stoxx® China A Minimum Variance Index UCITS ETF

Issuer: M&G

Asset Class: Equity

TER: 45bps

Trading Currency: GBP

Pays Income: False

Listing Date: 06 Aug 2018

Ticker: M9SV

ISIN: LU1750178011

This investment vehicle offers a strategic approach to the Chinese A-share market, which comprises companies listed on the Shanghai and Shenzhen stock exchanges. It is designed for investors who want to tap into the growth potential of China's vast domestic economy but are also concerned about the market's characteristic volatility. The core of the strategy is to provide exposure to large and mid-cap Chinese equities while aiming to mitigate risk. By employing a "minimum variance" methodology, the fund seeks to construct a portfolio with lower volatility than traditional market-capitalisation-weighted Chinese equity indices. This quantitative approach involves selecting and weighting securities from the parent index in a way that minimises the overall expected price fluctuations of the portfolio.

This defensive tilt can be particularly appealing during periods of market uncertainty or for investors with a lower risk tolerance. Instead of simply owning the largest companies, the strategy may overweight stocks and sectors that have historically exhibited lower volatility and weaker correlations with each other. The result is a distinct portfolio that can serve as a core holding for China exposure or as a tactical tool to manage risk within a broader emerging markets allocation. By focusing on risk reduction, the fund aims to provide a smoother investment journey, potentially cushioning downturns more effectively than a standard index-tracking product, while still allowing for participation in the long-term structural growth story of the world's second-largest economy.