Chinese equities have gone through an extraordinary boom-bust-recovery cycle. Regulatory crackdowns, the property crisis, weak consumer confidence and geopolitical tensions crushed valuations from 2021 onwards. Then 2025 brought a powerful rebound: the AIC’s China/Greater China investment trust sector gained roughly 42% in the 12 months to February 2026, helped by improving policy support, technology enthusiasm and deeply depressed starting valuations.
The picture in 2026 has become much more uneven. China’s economy continues to grow, but at a slower rate, property remains problematic and geopolitical risk has risen. For UK retail investors, that creates an unusual combination: potentially attractive long-term valuations and world-class companies, but significantly higher political, regulatory and macroeconomic risk than most developed markets.
Which UK investment trusts have the biggest China exposure?
There are only a handful of London-listed trusts offering genuinely concentrated China exposure. The three clearest pure plays are Fidelity China Special Situations (LON:FCSS), JPMorgan China Growth & Income (LON:JCGI) and Baillie Gifford China Growth (LON:BGCG). Several broader Asian trusts also have substantial allocations.
The distinction matters. An investor wanting a direct bet on a Chinese equity recovery should primarily compare FCSS, JCGI and BGCG. The other trusts dilute China-specific risk through Taiwan, Korea, India and Southeast Asia.
| Investment trust | Ticker | Approx. China / Greater China exposure* | Style | Main attraction |
| Fidelity China Special Situations | FCSS | ~100%+ economic China exposure | Blend / contrarian growth | Broadest dedicated China portfolio |
| JPMorgan China Growth & Income | JCGI | ~90–100% Greater China | Quality growth + income | China exposure with a 4%-of-NAV dividend policy |
| Baillie Gifford China Growth | BGCG | ~90–100% China-focused | Long-term growth | Higher-growth, innovation-heavy portfolio |
| Pacific Horizon | PHI | ~30% China + China A-shares | Aggressive Asian growth | China plus Korea/Taiwan AI and semiconductor exposure |
| Fidelity Asian Values | FAS | ~30% estimated China/Hong Kong exposure | Small/mid-cap value | Contrarian Asian stock-picking |
| JPMorgan Asia Growth & Income | JAGI | ~27% China + Hong Kong | Quality growth/income | More diversified route into China |
| Invesco Asia Dragon | IAD | Material China allocation, roughly around one-quarter to one-third | Value/contrarian Asia | China exposure within a diversified Asian portfolio |
*These figures are estimates rather than directly comparable accounting measures. Managers classify Chinese companies differently depending on listing location and economic exposure. For example, Fidelity reported geographic China exposure of 116.4% of total net assets at 31 May 2026, reflecting gearing/derivative exposure rather than meaning that 116% of gross assets are physically invested in mainland-listed shares. Pacific Horizon reported 18.5% China plus 11.8% China A-shares at 30 June. JAGI reported 20.1% China plus 7.2% Hong Kong.
1. Fidelity China Special Situations: the broadest China recovery play
Investment objective: long-term capital growth through an actively managed China-focused portfolio.
Fidelity describes the trust as a vehicle giving investors direct exposure to China’s long-term growth opportunity, including the ability to own listed and unlisted businesses.
FCSS is arguably the most diversified of the dedicated China trusts. Manager Dale Nicholls can move beyond China’s mega-cap internet companies into industrials, consumer businesses, advanced manufacturing and smaller companies.
That flexibility helped considerably during the 2025 recovery. In the six months to September 2025, FCSS produced a 29.7% NAV total return, versus approximately 18% for its benchmark, with advanced manufacturing, innovation, consumer and industrial holdings contributing strongly.
| FCSS total return | 1 year | 3 years | 5 years | 10 years |
| Share price | -3.3% | +36.0% | -22.1% | +109.3% |
| NAV | -6.3% | +29.1% | -21.8% | +80.4% |
Source: AIC figures, 22 July 2026.
This illustrates the China story perfectly. Long-term investors have made money over ten years, but someone buying around the 2021 peak has endured a painful period.
The trust’s discount has historically moved sharply with China sentiment. When investors become optimistic, the discount can narrow rapidly, magnifying share-price returns relative to NAV. When China falls out of favour, the opposite occurs.
Best suited to: a contrarian investor who wants a relatively broad, actively managed China allocation and is prepared to tolerate high volatility.
Main risk: it remains a concentrated country bet. Gearing can amplify both gains and losses.
2. JPMorgan China Growth & Income: China exposure with an income twist
Investment objective: long-term capital growth from companies in Greater China—China, Hong Kong and Taiwan—while targeting an annual dividend equal to 4% of NAV, paid quarterly.
That makes JCGI unusual.
China is not traditionally viewed as an income-investing market, so the trust effectively converts part of its capital return into a predictable distribution policy.
| JCGI total return | 1 year | 3 years | 5 years | 10 years |
| Share price | +14.3% | +25.5% | -45.2% | +107.7% |
| NAV | +11.2% | +17.8% | -44.7% | +83.5% |
Source: AIC figures, 22 July 2026.
The attraction is clear for investors wanting China exposure but also regular cash flow. The important caveat is that the dividend is linked to NAV and can effectively be funded partly from capital; it should not be confused with a conventional dividend yield generated entirely from underlying company income.
A dramatic recovery followed by another setback
JCGI’s NAV returned 29.3% in the year to September 2025, while its share price returned 35.2%. Its discount narrowed from 13.1% to 9.7%, demonstrating how improving sentiment can give shareholders a double benefit: rising underlying assets plus discount narrowing.
But 2026 has demonstrated the volatility.
For the six months to 31 March 2026, NAV fell around 9.5%, although that was materially better than the MSCI China index’s roughly 13.8% decline.
Best suited to: investors wanting dedicated China exposure but who value regular quarterly distributions.
Main risk: investors should not mistake the 4%-of-NAV dividend policy for a low-risk income strategy. Capital and income distributions ultimately depend on a volatile Chinese equity portfolio.
3. Baillie Gifford China Growth: the highest-octane growth option
Investment objective: long-term capital growth from an actively managed portfolio of Chinese companies, generally with a strong preference for businesses capable of substantial long-term expansion.
BGCG typically holds around 40–80 listed and potentially unlisted securities.
This is arguably the most stylistically distinctive of the three dedicated China trusts.
Baillie Gifford’s philosophy tends to emphasise disruptive growth, technology, innovation and companies capable of becoming substantially larger over five to ten years. That creates considerable upside when Chinese growth shares are in favour—but potentially brutal drawdowns when valuations compress.
The recovery has been impressive
For the year ended 31 January 2026, BGCG generated a 34.0% NAV total return, comfortably ahead of its benchmark’s 22.2%.
Longer-term figures still show the damage caused by the post-2021 Chinese growth-stock collapse:
| BGCG total return | 1 year | 3 years | 5 years | 10 years |
| Share price | +18.6% | +44.2% | -29.7% | +31.4% |
| NAV | +15.4% | +37.9% | -22.9% | +20.3% |
Source: AIC figures, 22 July 2026.
Recent AIC data showed the shares around a 9.2% discount to NAV.
The trust’s discount had already begun improving before 2026: it narrowed modestly from approximately 10.4% to 9.9% during the six months to July 2025, supported by share buybacks and stronger performance.
Best suited to: aggressive long-term investors who believe China’s technology, healthcare, consumer and innovation companies can compound strongly over the next decade.
Main risk: probably the least suitable of the three for cautious investors because growth-style exposure can create particularly large swings in both NAV and discount.
Broader Asian trusts: a less concentrated way to play China
For many UK retail investors, putting an entire regional allocation into a dedicated China trust may be unnecessary.
Broader Asian investment trusts allow investors to benefit if China recovers while retaining exposure to other powerful Asian themes.
Pacific Horizon
Pacific Horizon is particularly interesting because its China exposure is significant but sits alongside major positions in Korea and Taiwan.
At 30 June 2026 its geographic allocation included 18.5% China and 11.8% China A-shares, giving roughly 30% direct China exposure. Korea was 30.7% and Taiwan 23.2%.
Its recent performance has been spectacular:
| Pacific Horizon | 2021–22 | 2022–23 | 2023–24 | 2024–25 | 2025–26 |
| Share-price return | -27.9% | -11.4% | +17.4% | -2.7% | +92.2% |
| NAV return | -14.9% | -10.2% | +18.4% | -3.8% | +94.5% |
Periods ended 30 June.
But investors should not attribute that extraordinary 2025–26 return primarily to China. Major holdings such as Samsung Electronics, TSMC, SK Square and SK Hynix mean the trust has benefited enormously from the Asian semiconductor and AI boom.
Best suited to: aggressive growth investors wanting China plus exposure to Asia’s AI, semiconductor and technology ecosystem.
Fidelity Asian Values
Fidelity Asian Values takes a very different approach: contrarian, value-conscious investing with a particular interest in under-researched Asian smaller and mid-sized companies.
The managers have maintained significant exposure to China because they have found individual businesses trading at valuations they believe underestimate their long-term prospects. The trust was overweight China in its latest reporting.
Best suited to: value investors who want China exposure without betting everything on Chinese mega-cap technology.
Its small/mid-cap bias means it can behave very differently from MSCI China or the Hang Seng.
JPMorgan Asia Growth & Income
JAGI is another useful middle ground.
At 30 June 2026 it held 20.1% in China and 7.2% in Hong Kong, alongside 29.3% Taiwan, 26% South Korea and 9.7% India.
That diversification is significant. If China’s economy disappoints but Korean and Taiwanese technology shares continue performing strongly, JAGI is much less dependent on a Chinese recovery than FCSS, BGCG or JCGI.
Best suited to: investors wanting diversified Asian growth and income with meaningful—but not dominant—China exposure.
Have China trust discounts narrowed or widened in 2026?
Chinese equities have gone through an extraordinary boom-bust-recovery cycle so the answer is mixed rather than uniformly positive.
The huge improvement in Chinese equities during 2024–25 initially helped narrow discounts. JCGI’s discount, for example, improved from 13.1% to 9.7% during its 2025 financial year. BGCG also experienced modest discount narrowing alongside buybacks.
But 2026 has been less straightforward.
Chinese equities weakened during parts of the first half as investors reassessed economic momentum, property risks and geopolitics. As a result, discounts have not disappeared despite the strong 2025 recovery.
Recent AIC data put BGCG at roughly a 9.2% discount, while FCSS’s discount has fluctuated materially with sentiment.
Why this matters
Suppose a trust owns assets worth 100p per share but trades at 90p—a 10% discount.
If its NAV subsequently rises 20% to 120p and investor confidence causes the discount to narrow to 5%, the shares could rise to around 114p.
That is a roughly 27% share-price gain from a 20% NAV gain.
But discount widening works in reverse.
This ‘double leverage’ is one reason China investment trusts can move much more dramatically than the underlying market.
China’s stock market: where are the opportunities?
Technology and AI
China is increasingly difficult to characterise simply as a low-cost manufacturing economy.
It has globally significant businesses in AI, electric vehicles, batteries, robotics, e-commerce, biotechnology, renewable energy and advanced manufacturing.
This creates investment opportunities that are not easily replicated elsewhere.
Chinese companies also benefit from an enormous domestic market, deep engineering talent and increasingly sophisticated supply chains.
Attractive valuations
Valuation remains one of the strongest arguments for China.
Years of foreign investor withdrawals, regulatory uncertainty and weak economic sentiment compressed valuations dramatically relative to US equities and, in many cases, their own historical averages.
The opportunity is therefore partly contrarian: investors do not need China’s economy to become perfect.
They may simply need conditions to become less bad than markets expect.
That was one of the forces behind the 2024–25 rally.
Government support for equities
Beijing has increasingly emphasised stronger capital markets, shareholder returns, dividends and corporate governance.
Policy efforts to discourage destructive price competition—often called the ‘anti-involution’ campaign—could potentially improve corporate profitability in sectors suffering from excess capacity.
Reuters Breakingviews noted that policies encouraging companies to increase payouts have already helped shareholder returns and equity sentiment.
Consumption remains a huge long-term prize
China is attempting to rebalance its economy towards domestic consumption.
If households gradually reduce precautionary saving and confidence improves, consumer services, travel, healthcare, insurance, entertainment and premium domestic brands could benefit.
The IMF notes that China’s latest policy direction prioritises increasing consumption as a driver of growth.
Sharesify podcast with Emily Whiting of JPMorgan Asia Growth & Income
The risks: why China remains a higher-risk market
1. The property crisis is not fully resolved
China’s property downturn remains one of the biggest structural problems.
Falling property values hurt household confidence because real estate has historically represented a large proportion of household wealth.
The OECD expects Chinese economic growth of around 4.5% in 2026 and 4.3% in 2027, while warning that real-estate investment is likely to continue contracting and prices remain under pressure.
That makes a rapid consumer boom less certain.
2. Geopolitics
US-China strategic rivalry remains a permanent risk premium.
Areas of potential conflict include semiconductors, AI technology, export controls, Taiwan, trade tariffs and access to Western capital markets.
Recent tensions in the wider region underline that geopolitical risk cannot simply be valued like an ordinary corporate risk.
For UK investors, a serious escalation around Taiwan would affect not only China trusts but global technology portfolios because of Taiwan’s central role in semiconductor manufacturing.
3. Government intervention
China’s regulatory environment remains fundamentally different from Western developed markets.
The 2020–22 crackdown on internet platforms, private education and other industries demonstrated that government policy can change the economics of entire sectors extremely quickly.
That deserves a permanent valuation discount.
4. Deflation and weak domestic demand
China has struggled with subdued inflation and weak private demand.
The IMF noted that despite 5% growth in 2025, private domestic demand remained lacklustre, headline inflation was around zero and the GDP deflator continued to decline.
Deflation is dangerous because households delay spending, companies face pricing pressure and debt becomes harder to manage in real terms.
5. Currency risk
UK investors ultimately measure returns in sterling.
A falling renminbi can therefore reduce returns even when Chinese shares perform well in local currency.
Comparison: which trust suits which investor?
| Trust | China concentration | Investment style | Income appeal | Risk level | Potential investor |
| Fidelity China Special Situations | Very high | Flexible / contrarian growth | Low-moderate | Very high | Investor wanting a broad dedicated China recovery play |
| JPMorgan China Growth & Income | Very high | Quality/growth | High relative to peers | Very high | Investor wanting China plus regular distributions |
| Baillie Gifford China Growth | Very high | Aggressive growth | Low | Very high | Long-term investor bullish on Chinese innovation |
| Pacific Horizon | High but diversified | Aggressive Asian growth | Low | Very high | Investor wanting China + Asian AI/semiconductors |
| Fidelity Asian Values | Significant | Small/mid-cap value | Moderate | High | Contrarian/value investor |
| JPMorgan Asia Growth & Income | Significant | Quality growth/income | Higher | High | Investor wanting diversified Asia plus income |
| Invesco Asia Dragon | Significant | Value/contrarian Asia | Moderate | High | Investor seeking broader Asian value exposure |
Investor verdict
Chinese equities have gone through an extraordinary boom-bust-recovery cycle and perhaps the most important conclusion is that ‘China investment trust’ no longer describes a single investment proposition.
For investors convinced that Chinese equities are at the beginning of a multi-year re-rating, Fidelity China Special Situations arguably offers the most balanced dedicated exposure. Its broad opportunity set and ability to invest beyond mega-cap technology make it a credible core China holding—although ‘core’ here still means high risk.
Baillie Gifford China Growth offers potentially greater upside if Chinese growth and technology stocks return decisively to favour, but its history demonstrates how painful the downside can be.
JPMorgan China Growth & Income is particularly interesting for investors who want regular distributions, provided they understand that its 4%-of-NAV payout policy does not transform volatile Chinese equities into a conventional defensive income asset.
Broader play
For many UK retail investors, however, the better risk-adjusted approach may be a broader Asian trust. Pacific Horizon offers an unusually powerful combination of China, Korean memory chips, Taiwanese semiconductors and Asian technology, while JPMorgan Asia Growth & Income provides a more diversified and income-oriented route.
The biggest potential catalyst across the dedicated China trusts is a combination of earnings recovery plus discount narrowing. If China’s economy stabilises, consumer confidence improves and foreign investors return, shareholders could benefit from both rising NAVs and tighter discounts.
The reverse is equally important. A renewed property downturn, regulatory intervention or geopolitical shock could hit underlying portfolios and widen discounts simultaneously.
China therefore looks less like a straightforward ‘cheap market’ opportunity and more like a high-risk contrarian allocation where active stock selection and position sizing matter enormously. For a diversified UK investor, it is generally more appropriate as a satellite allocation than as the foundation of a portfolio.
Data note: exposure percentages and performance data are based on the latest available portfolio disclosures around June/July 2026 and can change monthly. ‘China exposure’ is particularly sensitive to whether Hong Kong-listed Chinese businesses, offshore holding companies and derivatives are classified by listing domicile or underlying economic exposure.
Association of Investment Companies – investment trust data provides current NAV discounts and performance figures, while the managers’ latest portfolio disclosures are available from Fidelity Investment Trusts, JPMorgan Asset Management UK and Baillie Gifford.
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