- You can get exposure to Asian growth without investing in China and still tap into strong growth
- Taking this strategy could mean that your portfolio is concentrated on volatile markets such as India and Vietnam
- There are not many funds available which invest in Asia without China
If you invest in Asia, Chinese equities are likely to account for a large part of your allocation, especially if you invest via passive funds which track regional indices. However, there are economic and ethical reasons why you might not be comfortable with exposure to China, and it is possible to tap into strong Asian growth potential without investing in this market.
China is no longer the fastest-growing economy in emerging Asia. Some Association of Southeast Asian Nations (Asean) countries – Indonesia, Philippines, Malaysia, Thailand and Vietnam – are collectively expected to grow faster than China this year and next year. “We can see evidence that manufacturers from both China and the west are looking to shift capacity into these markets to diversify and de-risk their exposures,” says Vivek Bhutoria, emerging markets portfolio manager at Federated Hermes.