ASF Fund: advantages and how to invest in it

28.02.2023

For Russian investors, the choice of funds for safe investment in China is small. The most popular is the FXCN fund from the international financial company FinEx.

The FXCN fund includes shares of most major Chinese companies, mainly in the field of technology and finance. Its Solative GBS China ex A-Shares Large & Mid Cap USD Index NTR tracks the stock price of 184 major Chinese companies.

Here are the top 5 companies in FXCN and their share in it:

  • Alibaba — 20,54%.
  • Tencent — 15,47%.
  • Meituan — 3,81%.
  • JD.com — 3,26%.
  • China Construction Bank — 2,76%.

To buy an FXCN fund, you need to open a brokerage account with any reliable broker. For example, this can be done on the AK BARS Finance website. From the documents you will need only a passport, INN and SNILS. After that, it remains to replenish the account and buy the fund by finding it by name or by the ticker IE00BD3QFB18.

The fund’s management commission is the average for the market — 0.9%. The fund is sold for rubles, but it is also available for dollars at some brokers. Now one share of the fund is estimated to be slightly more expensive than 3,000 rubles.

Advantages of the fund:

  1. A good opportunity to divide investments by country: the more countries in your portfolio, the less risks.
  2. The only such fund available in the Russian Federation for any categories of investors.
  3. A fairly high yield.

Disadvantages of the fund:

  1. The risks of investing in China, which you read about above. The main one is the increased control of the state over the economy.
  2. There is a great dependence of the fund’s value on the share price of the largest companies Alibaba and
  3. Tencent, since together they make up as much as 36% of the fund.
  4. The fund was created in Ireland, and investor protection will not be as simple as in the situation with Russian ETFs.
  5. In general, FXCN is a good opportunity to invest in Chinese securities. But given the risks, it is worth allocating no more than 10% of the portfolio to it.

Right now, the fund has sunk by more than a third from its February high, and the entry price is very attractive. You can start buying, but enter gradually, by a ladder, as an even greater drawdown is possible.

If you still invest in individual stocks, then you should choose only companies that have already adjusted well in price, like Alibaba, Vipshop, Baidu. But even in this case, it is necessary to distribute investments by industry.