Trustnet Magazine Issue 15 February 2016 | Page 18

INVESTMENT STRATEGY

CHINA

These are the growth figures you
don’t want to see in your next ISA
Annual Platform Fees over 10 years*
£1,000

0.45%

£900
0.40%

£800

0.35%

£700
£600

0.25%

£500
£400
£300

Trustnet Direct

£200
£100
0
1yr

2yrs

3yrs

4yrs

5yrs

6yrs

7yrs

8yrs

9yrs

10yrs

*The graph displays platform fees plus the cost of 5 transactions per annum with Trustnet Direct compared with
platforms charging 0.45%, 0.40%, 0.35% and 0.25% per annum in platform fees. Assumes £15,000 new ISA limit
invested each year for 10 years and assumes 5% growth net of charges.

The good news is that if you invest the new ISA limit of £15,000 per annum over the next 10 years and it grows at 5% per annum
net of charges, you’ll have built a nest egg of over £198,000 tax-free.
The bad news is that platform fees can seriously damage your wealth, as the chart above shows.

“CHINA NOW HAS THE
BIGGEST E-COMMERCE
MARKET IN THE WORLD,
MEANING THAT WHILE
SOME AREAS ARE
SLOWING, OTHER AREAS
ARE GROWING RAPIDLY”

investment officer at Cazenove
Capital Management, explains
the economy is trying to become
less reliant on manufacturing and
make itself more services-oriented.
“This does not happen quickly
or easily, especially when you have
an ageing population – just see
what happened in Japan,” he said.
“This is all rather de-stabilising
and the resulting uncertainty is
what causes markets to correlate.
However, China is not the cause
– other markets are simply
reacting to seeing the symptoms of
malaise.”

THE BIG DECISIONS

Gary Greenberg, head of
emerging markets at Hermes
Investment Management, adds:
“At the end of the day if China’s
economy was at risk of dropping
4 to 5 per cent and the currency
were to drop 15 to 20 per cent,
there would be a good macro
reason for avoiding the market
altogether.”
“However, looking carefully at
the Chinese economy, you can see

A TALE OF TWO ECONOMIES

While there have been incredible
highs, collapses and mass stock
suspensions, Jeffrey notes that
domestic Chinese stock markets in
2015 still showed double-digit gains
for the year.

At Trustnet Direct, we charge 0.25% in platform fees but cap it at just £250 max per annum (£200 + 5 trades at £10 per trade).
We may not be the cheapest on day one, but when your investments grow, your charges don’t.
So, if you want a premium platform, without the premium price tag, open your next ISA with Trustnet Direct.

PERFORMANCE OF TRUST VS BENCHMARK SINCE LAUNCH
80%

Fidelity (FIL Invt Intl) - Fidelity China Special Situations (26.56%)
MSCI China (3.79%)

-20%

Trustnet Direct does not provide advice on the suitability of investments. It is an execution-only service. If you are unsure
about the suitability of investments, seek independent financial advice.
The price and value of investments and their income fluctuates: you may get back less than the amount you invested.
Past performance is no guarantee of future performance.
Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

40%
20%
0%
-20%

www.trustnetdirect.com
Trustnet Direct is a trading style of Trustnet Limited, Authorised and Regulated by the Financial Conduct Authority.

Source: FE Analytics

trustnetdirect.com

Jan 16

Sep

May

Jan 15

Sep

May

Jan 14

Sep

May

Jan 13

Sep

May

Jan 12

Sep

May

Jan 11

Sep

May 10

-40%

Set your account up now at:

that it is really two economies:
an industrial economy that is
shrinking slightly year-on-year
and a services economy that is
growing at 10 to 11 per cent.
Within this context, from a
bottom-up perspective there are
plenty of good opportunities in
China.”
If there are plenty of
opportunities to be had from
China, should investors go down
the route of investing in a Chinaonly fund, or would they be
better served in a more general
emerging markets vehicle?
Calder is in the latter camp.
While he currently has a zero
weighting to emerging markets,
he holds the Schroder ISF Asian
Total Return fund, run by Robin
Parbrook.
“Robin actually does not
hold much in China at present,
relative to the index, but in
holding a fund such as this we
are leaving the decision to the
manager, who is more skilled at
calling when to overweight or
underweight a country in the
region,” he said.
While another option is to go
down the closed-ended route, there
is a lack of China-only investment
trusts and there is no equivalent to
IA China/Greater China. Instead the
two funds that are solely invested in
the country – Fidelity China Special
Situations and JP Morgan Chinese
– sit in the Country Specialists Asia
Pacific sector.
17