Andy Mantel, founder and managing director of investment company Pacific Sun, enjoys the lengthy train ride from Hong Kong to Shanghai. Armed with research, he uses the 36-hour stretch to read up on companies he may invest in, and to take a first-hand look at the quickly changing country.
The China Mantou Fund, which Mr Mantel manages, was launched in March last year and is still in a development phase. Listed on the Irish stock exchange, the fund is aimed at institutions and high-net worth individuals who have at least US$100,000 to invest in China.
To qualify for inclusion in the fund, stocks must derive 50 per cent of their revenue, earnings or production from the mainland. That gives the fund a wider mandate than many on the market. It can choose from stocks listed in China, to red chips and H shares in Hong Kong and further afield to mainland-related counters on stock exchanges in Singapore, South Korea, New York and, increasingly, Japan.
'Most other China funds fall into two categories,' Mr Mantel says. 'One is the large investment houses that have a lot of China-dedicated money and want to buy large-cap stocks. The other type of fund is one-dimensional - they will only invest in small caps or red chips. We are able to look at all the China plays, and our focus is on primary information sources.
'The idea is that it is better to diversify among all the asset classes because they all move in different directions.' Mr Mantel is also mid-way through an application process to allow the fund to sell stocks short - or profit when share prices are falling - although the long bias will remain.
'Right now there are some companies in the private sector that are really feeling the heat,' Mr Mantel says. 'There are also some smaller, mid-cap stocks which are very expensive. There will be good shorting opportunities and there are really not that many China hedge funds, so we see it as a good niche. We hope to be strategically positioned to make both long and short investments.'