The Sub-Fund’s investment objective is to achieve long term capital growth through investing globally in a portfolio consisting primarily of high yield debt securities (i.e. debt securities which are non-investment grade or unrated), which aim to generate a steady flow of income in addition to capital appreciation for the Sub-Fund, including debt securities issued in emerging markets. There can be no assurance that the Sub-Fund will achieve its investment objective.
Indicative asset allocation
The indicative asset allocation of the Sub-Fund is as follows:
At least 70% of the Net Asset
Value of the Sub-Fund
High yield debt securities (including
convertible bonds), which may be denominated in currencies including but not
limited to USD, EUR, HKD or offshore RMB (such offshore RMB denominated debt
securities are also referred to as "Dim Sum" bonds).
Up to 100% of the Net Asset
Value may be invested in debt securities which are unrated or rated below
Such high yield debt securities
may be issued or traded in developed markets or emerging markets.
Up to 30% of the Net Asset
Value of the Sub-Fund in aggregate
Onshore RMB denominated debt securities issued in the PRC that are
traded on the interbank bond market or the listed bond market in the PRC (up
to 20% of the Net Asset Value)
Investment grade debt securities
Other collective investment schemes and money market funds
FDIs for investment purpose
The Sub-Fund will invest at least 70% of its Net Asset Value globally in a portfolio of high yield debt securities (i.e. debt securities which are non-investment grade or unrated), which may be denominated in currencies including but not limited to USD, EUR, HKD or offshore RMB (such offshore RMB denominated debt securities are also referred to as "Dim Sum" bonds, i.e. bonds issued outside China but denominated in RMB); and where the Manager believes such debt securities are being traded at significant discount to their underlying intrinsic values. The Sub-Fund has no particular focus in terms of geographical region in the selection of such investments. The Manager may invest significantly in any one region or country.
Up to 100% of the Net Asset Value may be invested in debt securities which are unrated or rated below investment grade by Fitch Ratings or Moody's or Standard and Poor's, including (not limited to) listed and unlisted bonds, government bonds, convertible and non-convertible bonds, fixed and floating rate bondsor other similar securities. A debt security is considered to be non-investment grade if its credit rating is
(in the case of a long-term debt security) below BBB- by Standard & Poor's and Fitch Ratings or below Baa3 by Moody's or equivalent rating as rated by an international credit rating agency; or
(in the case of a short-term debt security) below A-3 by Standard & Poor's or below F3 by Fitch Ratings or below P-3 by Moody's or equivalent rating as rated by an international credit rating agency.
For split credit ratings, the lowest rating shall apply to determine whether a debt security is non-investment grade. For the purpose of the Sub-Fund, "unrated" refers to where neither the instrument itself nor its issuer has a credit rating assigned by international credit rating agencies. For a debt security which itself does not have a credit rating, the Manager will assess the debt security by reference to the credit rating of the issuer, the guarantor or the keepwell provider.
High yield debt securities may be issued or traded in developed markets or emerging markets. There is no set proportion between investments in developed markets and emerging markets, therefore investments in emerging markets may be up to 100% of the Net Asset Value.
Up to 100% of the Sub-Fund's Net Asset Value may be invested in convertible bonds (issued and/or guaranteed by issuers such as corporations, financial institutions and banks). The Sub-Fund's expected total maximum investments in debt instruments withloss-absorption features ("LAP") e.g. contingent convertible bonds ("CoCos") and senior non-preferred debts will be up to 30% of its Net Asset Value. CoCos may have non-viability and/or loss absorption convertible features, i.e. they are subject to compulsory conversion out of the issuer's control. They are hybrid capital securities that absorb losses when the capital of the issuer falls below a certain level, and may be compulsorily redeemed upon the occurrence of a trigger event which may be out of the issuer's control. They are risky and highly complex investment instruments. Under certain circumstances CoCos can be converted into shares of the issuing company, potentially at a discounted price, or cause the permanent write-down to zero of the principal investment and/or accrued interest such that the principal amount invested may be lost on a permanent or temporary basis. In the event convertible bonds are converted into shares resulting in deviation from the indicative asset allocation, the Manager will arrange for the shares to be sold within 10 Business Days. Seniornon-preferred debts,also known as non-preferred senior (NPS) or Tier 3 debts, are unconditional, senior and unsecured obligations issued by a financial institution, and rank pari passu amongst themselves and senior to subordinated notes, but junior to senior preferred notes and any claims benefiting from legal or statutory preferences.
The Sub-Fund will not invest more than 10% of its Net Asset Value in debt securities issued and/or guaranteed by a single sovereign issuer (including its government, public or local authority) which is below investment grade and/or unrated.
The Sub-Fund will invest in a broadly diversified portfolio of debt securities with no fixed duration, term structure or industry sector weightings in the allocation of assets in developed and/or emerging markets. Selection of investments will be determined by the availability of attractive investment opportunities.
Under exceptional circumstances (e.g. market crash or major crisis) or adverse market conditions, the Sub-Fund may be invested temporarily up to 100% of its Net Asset Value in liquid assets such as bank deposits, certificates of deposit, commercial paper and treasury bills, and investments in investment grade debt securities may temporarily increase to up to 100%.
Other debt securities
The Sub-Fund may also invest up to 30% of its Net Asset Value in investment grade debt securities. The Sub-Fund may invest up to 20% of the Net Asset Value in onshore RMB denominated debt securities issued in the PRC that are traded on the interbank bond market or the listed bond market in the PRC, which may include investments in debt securities issued by or fully guaranteed by the PRC government and/or government related entities and urban investment bonds (城投債). Urban investment bonds are debt instruments issued by local government financing vehicles ("LGFVs") in the China listed bond and interbank bond market. These LGFVs are separate legal entities established by local governments and/or their affiliates to raise financing for public welfare investment or infrastructure projects.
The Sub-Fund may also invest less than 30% of its Net Asset Value in shares listed on stock exchanges, including but not limited to Hong Kong, Singapore or U.S. stock exchanges (including American Depositary Receipts and preference shares). This includes any listed equities the Sub-Fund may hold as a result of the conversion of the convertible bonds, i.e. the Sub-Fund's aggregate exposure in equities will not exceed 30% of the Sub-Fund's Net Asset Value. The Sub-Fund will not hold equities that are unlisted.
Financial derivative instruments and other investments
The Sub-Fund may also invest in units in any unit trust or shares in any mutual fund corporation or any other collective investment scheme (including those managed by the Manager or its connected persons) authorised by the SFC or in recognised jurisdiction schemes and may hold cash, deposits, and other money market instruments (such as but not limited to treasury bills, commercial papers, certificates of deposit as considered appropriate by the Manager). The Sub-Fund will not invest more than 30% of its Net Asset Value in the above instruments/investments.
The Sub-Fund may invest up to 50% of the Net Asset Value in sale and repurchase transactions and borrow up to 10% of its Net Asset Value with a view to creating additional income.
For the purpose of the Sub-Fund, sale and repurchase transactions are transactions where the Sub-Fund sells securities such as bonds for cash and simultaneously agrees to repurchase the securities from the counterparty at a pre-determined future date for a pre-determined price. A sale and repurchase transaction is economically similar to secured borrowing, with the counterparty of the Sub-Fund receiving securities as collateral for the cash that it lends to the Sub-Fund. Please refer to the section "Investment Objective, Strategy and Restrictions" – "Securities Financing Transactions" in the main body of this Explanatory Memorandum for requirements and the Sub-Fund's policies regarding sale and repurchase transactions.
Cash obtained in sale and repurchase transactions will be used for liquidity management, re-investment and hedging purposes. Notwithstanding the requirements on re-investment of collateral as described under the sub-section headed "Collateral" under the section "Investment Objective, Strategy and Restrictions" in the main body of this Explanatory Memorandum, the Sub-Fund may re-invest the cash collateral received from sale and repurchase transactions in investments other than those set out in 7.36(j) of the Code provided that the following requirements are met:
the re-investment, together with the Sub-Fund's net derivative exposure, do not in aggregate exceed 50% of the Sub-Fund's Net Asset Value;
the re-investment is consistent with the Sub-Fund's investment objective and strategies;
the re-investment is limited to securities which are sufficiently liquid and of good quality; and
the re-investment is subject to the corresponding investment restrictions and limitations applicable to such investments or exposure as set out in Chapter 7 of the Code and complies with Notes (3) and (4) to 7.36(j) of the Code.
Re-investment of cash collateral received from sale and repurchase transactions in compliance with the above requirements shall not be subject to the limitation in 7.21 of the Code which allows borrowing of the Sub-Fund of up to 10% of the Net Asset Value.
The Sub-Fund may also invest in FDIs for hedging and investment purposes to the extent permitted by the Code and the provisions set out under the section "Investment Objective, Strategy and Restrictions" in the main body of this Explanatory Memorandum. The Sub-Fund will not invest in collateralised and/or securitised products (such as asset backed securities, mortgage backed securities and asset backed commercial papers). The Sub-Fund will not enter into any securities lending or reverse repurchase transactions or similar over-the-counter transactions. The Sub-Fund will not write options.
No waivers from the investment restrictions set out in the main body of this Explanatory Memorandum have been sought or granted by the SFC.
Class A (Acc) USD
Class A (Dis) USD
Class I2 (Dis) USD
Class I1 (Dis) USD
Class A (Acc) HKD
Class A (Dis) HKD
Class I (Acc) HKD
Class I (Dis) HKD
Class A (Acc) RMB
Class A (Acc) Hedged RMB
Class A (Dis) RMB
Class A (Dis) Hedged RMB
Class I (Acc) RMB
Class I2 (Dis) Hedged RMB
Class I (Dis) RMB
Class I1 (Dis) Hedged RMB
Class X (Acc) USD
Class X (Acc) HKD
Class X (Acc) Hedged RMB
Class I (Acc) USD
Class I (Acc) Hedged RMB
Management Fee (p.a.)
* (% Net Asset Value of the Sub-Fund per annum)
*Please note that these fees may be increased up to a permitted maximum on giving 1 month’s notice to unitholders. Please refer to the section of the prospectus entitled “Fees and Expenses” for further details of the fees and charges payable.
Copyright? 2023. E Fund Management (Hong Kong) Co., Limited.
E Fund Management (Hong Kong) Co., Limited is the issuer of this report. This report is neither an offer nor solicitation to purchase units of the fund; applications for units may only be made on forms of application available with the Explanatory Memorandum. Investments are subject to investment risks, fund value may go up as well as down and past performance is not indicative of future performance. Investors should read carefully the Explanatory Memorandum (including the section “Risk Factors”) for the relevant risks associated with the investment in the fund before investing.
Distribution of this report may be restricted in certain jurisdictions. This report does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom it is unlawful to distribute such a report or make such an offer or solicitation. This report is exempted from pre-vetting and authorization by the Securities and Futures Commission of Hong Kong and has not been reviewed by the Securities and Futures Commission of Hong Kong.
SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.