The investment objective of the Sub-Fund is to achieve long term capital growth through investing globally in a portfolio consisting primarily of debt securities denominated in USD, EUR, HKD or offshore RMB (“CNH”), which aim to generate a steady flow of income in addition to capital appreciation for the Sub-Fund. There can be no assurance that the Sub-Fund will achieve its investment objective.
The Sub-Fund will invest at least 70% of its net asset value (“NAV”) in a portfolio of USD, EUR or HKD denominated or CNH denominated (“Dim Sum” bonds, i.e. bonds issued outside China but denominated in RMB) offshore debt securities issued or traded in the global debt securities markets, including in developed markets and emerging markets. Investments in emerging markets may constitute up to 100% of NAV.
The Sub-Fund will invest in a broadly diversified portfolio of debt securities with no fixed duration, term structure, geographical (subject to the limit in onshore RMB bonds stated below) or industry sector weightings. Selection of debt investments will be determined by the availability of attractive investment opportunities, where the Manager believes such debt securities are being traded at significant discount to their underlying intrinsic values.
The Sub-Fund may invest less than 30% of its NAV in onshore RMB bonds, via the mutual bond market access between Hong Kong and Mainland China (“Bond Connect”), the regime allowing foreign institutional investors to invest in the PRC inter-bank bond market (the “CIBM Regime”) and/or the Manager’s QFI status. The Sub-Fund’s total investments via QFI (in bonds and in equities as discussed below) will be less than 30% of its NAV.
The debt securities in which the Sub-Fund may invest shall include, but are not limited to, listed and unlisted bonds, government bonds, convertible bonds, fixed and floating rate bonds and high-yield bonds.
The Sub-Fund may invest all its assets in investment grade debt securities, or in debt securities which are unrated or rated below investment grade. For debt securities other than onshore RMB bonds, (i) a long-term debt security is considered investment grade if its credit rating is BBB- or higher by Standard & Poor's and Fitch Ratings or Baa3 or higher by Moody's or equivalent rating as rated by an international credit rating agency; and (ii) a short-term debt security is considered investment grade if its credit rating is A-3 or higher by Standard & Poor’s or F3 or higher by Fitch Ratings or P-3 or higher by Moody’s or equivalent rating as rated by an international credit rating agency. For onshore RMB bonds, investment grade bonds have a minimum credit rating of BBB- as rated by one of the credit rating agencies in China. 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.
Up to 100% of the Sub-Fund’s NAV may be invested in convertible bonds (issued and/or guaranteed by issuers such as corporations, financial institutions and banks), including up to 20% in contingent convertible bonds (“CoCos”). 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.
The Sub-Fund will not invest more than 10% of its NAV 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. 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 NAV in liquid assets such as bank deposits, certificates of deposit, commercial paper and treasury bills for cash flow management.
The Sub-Fund may also invest less than 30% of its NAV in shares of companies listed in Hong Kong, Singapore, Taiwan, the United States or Mainland China (including American Depositary Receipts and preference shares). Investments may be made in A-Shares listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange directly through the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect or the Manager’s QFI status. This includes any listed equities the Sub-Fund may hold as a result of the conversion of the convertible bonds (including CoCos), i.e. the Sub-Fund’s aggregate exposure in equities will be less than 30% of the Sub-Fund’s NAV. The Sub-Fund will not hold equities that are unlisted.
Financial derivative instruments (“FDIs”) and other investments
The Sub-Fund may invest up to 20% of the NAV in sale and repurchase transactions. 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. For sale and repurchase transactions, the Manager will seek to appoint independent counterparties approved by the Manager with credit rating of BBB- or above (by Moody's or Standard & Poor's, or any other equivalent ratings by recognised credit rating agencies) or which are SFC-licensed corporations or are registered institutions with the Hong Kong Monetary Authority. Any incremental income generated will be credited to the account of the Sub-Fund after deducting any fees charged by parties operating such transactions. It is the intention of the Manager to sell the securities for cash equal to the market value of the securities provided to the counterparty. Cash obtained in sale and repurchase transactions will be used for liquidity management, re-investment and hedging purposes. Where cash received by the Sub-Fund is used for re-investment, such cash may only be re-invested in accordance with Chapter 7 of the SFC’s Code on Unit Trusts and Mutual Funds (the “Code”) and the provisions set out under the section “Investment Objective, Strategy and Restrictions” in the Explanatory Memorandum. The Sub-Fund may also invest in FDIs for hedging and investment purposes to the extent permitted by Chapter 7 of the Code and the provisions set out under the section “Investment Restrictions” in the Explanatory Memorandum. 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 invest less than 30% of its NAV in the above instruments/investments. 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.
Class A (Acc) RMB
Class A (Dis) RMB
Class A (Acc) Hedged RMB
Class A (Dis) Hedged RMB
Class I (Acc) RMB
Class I (Dis) RMB
Class A (Acc) USD
Class A (Dis) USD
Class A (Acc) HKD
Class A (Dis) HKD
Class I (Acc) USD
Class I (Dis) USD
Class I (Acc) Hedged RMB
Class I (Dis) Hedged RMB
Class I (Acc) HKD
Class I (Dis) HKD
Class X (Acc) HKD
Class X (Acc) Hedged RMB
Class X (Acc) USD
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.