China's economy is following a path that is quite distinct from other emerging markets. Understanding the risk/return characteristics that define that path is key to thinking through the inclusion of Chinese assets in an institutional portfolio, including the consideration of a dedicated allocation to China.
Given China's idiosyncratic path compared with other emerging markets, the ongoing evolution of its growth story and associated return opportunities, and the unique risks involved, investors would be well-served to give particular, dedicated consideration to China investment.
Taking full advantage of the China growth story in equities requires the active identification of key opportunities – and crucial risks; in this unique market, many investors would benefit from making a separate allocation to China.
China’s fixed income market represents an intriguing opportunity to enhance the yield potential of investors’ portfolios; investors are increasingly making the transition from “How?” to “How much?” when considering an allocation to China bonds.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
Responsible-Factor (R Factor) scoring is designed by State Street to reflect certain ESG characteristics and does not represent investment performance. Results generated out of the scoring model is based on sustainability and corporate governance dimensions of a scored entity.
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