As low as 0 %
Derivatives knowledge not required
iFund risk rating methodology is a qualitative and quantitative assessment of a single fund’s geographic and asset class focus, investment style and any potential risk factors, as measured from one (1) (lowest risk) to six (6) (highest risk). For the funds with risk rating five (5) or six (6), these are mainly aimed at providing capital appreciation to investors by investing primarily in single market equities, single industry equities or derivatives etc. For more details, please refer to the Due Diligence section under the Procedures page.
As low as 0 %
Derivatives knowledge not required
|Dividend Date||Dividend Records (HKD)|
The investment objective of the Sub-Fund is to seek medium to long term capital growth and income through investing primarily in equity securities and/or debt securities, that are either (a) traded in China or (b) issued by entities incorporated in China or entities which have significant operations in or assets in, or derive significant portion of revenue or profits from China. The equity securities and debt securities as described above are hereinafter referred to as "Equity Securities" and "Debt Securities", respectively. The Equity Securities and Debt Securities are collectively referred to as "China Securities".
Investment involves risks. Please refer to the Explanatory Memorandum for details including the risk factors.
1. Investment risk
The Sub-Fund's investment portfolio may fall in value and therefore your investment in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.
2. Concentration risk/China market risk
- The Sub-Fund's investments are concentrated in China. The value of the Sub-Fund may be more volatile than that of a fund having a more diverse portfolio of investments.
- The value of the Sub-Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the China market.
3. Equity market risk
The Sub-Fund's investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors.
4. Asset Allocation Risk
The performance of the Sub-Fund is dependent on the success of the asset allocation strategy employed by the Sub-Fund. There is no assurance that the strategy employed by the Sub-Fund will be successful. In adverse situation, the Sub-Fund's asset allocation strategy may become ineffective and may result in losses to the Sub-Fund.
5. Interest rates, credit and downgrading risks
- The Sub-Fund is subject to interest rate risk. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise.
- The Sub-Fund is also exposed to the credit/default risk of issuers or guarantors of the debt securities that the Sub-Fund may invest in. If the issuer or guarantor of any of the securities in which the Sub-Fund invests defaults or suffers insolvency or other financial difficulties, the value of such Sub-Fund will be adversely affected and may lead to a loss of principal and interest.
- The credit rating of a debt instrument or its issuer or guarantor may subsequently be downgraded. In the event of such downgrading, the value of the Sub-Fund may be adversely affected. The Manager may or may not be able to dispose of the debt securities that are being downgraded.
6. Risks relating to below investment grade and non-rated securities
The Sub-Fund may invest in below investment grade, or rated BB+ or below by a China credit rating agency, or non-rated debt securities. Such debt securities are generally subject to lower liquidity, higher volatility and greater risk of loss of principal and interest than higher-rated debt securities.
7. Risks associated with Stock Connects
The relevant rules and regulations on Stock Connects are subject to change which may have potential retrospective effect. The programme is subject to quota limitations. Where a suspension in the trading through the Stock Connects is effected, the Sub-Fund's ability to invest in China A-Shares or access the PRC market through the programme will be adversely affected. In such event, the Sub-Fund's ability to achieve its investment objective could be negatively affected.
8. "Dim Sum" bond (i.e. bonds issued outside of mainland China but denominated in RMB) market risk
The "Dim Sum" bond market is still a relatively small market which is more susceptible to volatility and illiquidity. The operation of the "Dim Sum" bond market as well as new issuances could be disrupted causing a fall in the Net Asset Value of the Sub-Fund should there be any promulgation of new rules which limit or restrict the ability of issuers to raise RMB by way of bond issuances and/or reversal or suspension of the liberalization of the offshore RMB (CNH) market by the relevant regulator(s).
9. Risks associated with China interbank bond market
Investing in the China interbank bond market via Foreign Direct Access Regime and/or Bond Connect is subject to regulatory risks and various risks such as volatility risk, liquidity risk, settlement and counterparty risk as well as other risk factors typically applicable to debt securities. The relevant rules and regulations on investment in the China interbank bond market are subject to change which may have potential retrospective effect. In the event that the relevant PRC authorities suspend account opening or trading on the China interbank bond market, the Sub-Fund's ability to invest in the China interbank bond market will be adversely affected.
10. Sovereign debt risk
The Sub-Fund's investment in securities issued or guaranteed by governments may be exposed to political, social and economic risks. In adverse situations, the sovereign issuers may not be able or willing to repay the principal and/or interest when due or may request the Sub-Fund to participate in restructuring such debts. The Sub-Fund may suffer significant losses when there is a default of sovereign debt issuers.
11. Credit rating risk and credit rating agency risk
Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuer at all times. In particular, for onshore debt securities, the credit appraisal system in the Mainland and the rating methodologies employed in the Mainland may be different from those employed in other markets. Credit ratings given by Mainland rating agencies may therefore not be directly comparable with those given by other international rating agencies.
12. Currency risk
Underlying investments of the Sub-Fund may be denominated in currencies other than the base currency of the Sub-Fund, i.e. US dollars. Also, a class of Units may be designated in a currency other than the base currency of the Sub-Fund. The net asset value of the Sub-Fund may be affected unfavourably by fluctuations in the exchange rate between these currencies and US dollars and by changes in exchange rate controls.
13. China tax risk
- There are risks and uncertainties associated with the current Chinese tax laws, regulations and practice (which may have retrospective effect). Any increased tax liabilities on the Sub-Fund may adversely affect the Sub-Fund's value.
- The Manager currently does not intend to withhold any amount of realised and/or unrealised capital gains on investments in China A-Shares and/or debt securities issued in mainland China.
- The Manager currently intends to make provisions for any PRC taxes payable by the Sub-Fund on (i) dividends derived from PRC Equity Securities (including China A-Shares acquired through the Stock Connects) and (ii) interest from debt securities issued in mainland China, at a rate of 10% (or as otherwise advised by the Sub-Fund's tax adviser), if the relevant WIT is not withheld at source. Any shortfall between the provision and the actual tax liabilities, which will be debited from the Sub-Fund's assets, will adversely affect the Sub-Fund's asset value. The actual tax liabilities may be lower than the tax provision made. Depending on the timing of their subscriptions and/or redemptions, investors may be disadvantaged as a result of any shortfall of tax provision and will not have the right to claim any part of the overprovision (as the case may be).
14. Risks of investing in other funds
The underlying funds in which the Sub-Fund may invest may not be regulated by the SFC. There may be additional costs involved when investing into these underlying funds. There is also no guarantee that the underlying funds will always have sufficient liquidity to meet the Sub-Fund's redemption requests as and when made.
15. Risks relating to investment in ETFs
The units/shares in an ETF which the Sub-Fund may invest in may be traded at large discounts or premiums to their net asset value due to disruptions to creations and realisations, and supply and demand forces in the secondary trading market for units/ shares in the ETF. In addition, the manager of an ETF may not be able to achieve close correlation with the tracking index for the relevant ETF and therefore the ETF's returns may deviate from that of its tracking index. These may in turn affect the net asset value of the Sub-Fund.
16. Derivative risk
- Risks associated with derivative instruments include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/component of a derivative instrument can result in a loss significantly greater than the amount invested in the derivative instrument by the Sub-Fund. Exposure to derivative instruments may lead to a higher risk of significant loss by the Sub-Fund.
- The Sub-Fund may use derivative instruments for hedging purposes which may not achieve the intended purpose. In an adverse situation, the Sub-Fund's use of derivative instruments may become ineffective in achieving hedging and may result in significant losses.
17. Effect of distribution out of capital
The Manager may at its discretion make distributions from income and/or capital in respect of the distributing classes of the Sub-Fund. Distributions paid out of capital amount to a return or withdrawal of part of the unitholder's original investment or from any capital gains attributable to that original investment. Any such distributions may result in an immediate reduction of the net asset value per Unit.
18. Currency hedging risk
- Adverse exchange rate fluctuations between the base currency of the Sub-Fund and the class currency of the currency hedged class units may result in a decrease in return and/or loss of capital for unitholders. Over-hedged or under-hedged positions may arise and there can be no assurance that these currency hedged class units will be hedged at all times or that the Manager will be successful in employing the hedge.
- The costs of the hedging transactions will be reflected in the net asset value of the currency hedged class units and therefore, an investor of such currency hedged class units will have to bear the associated hedging costs, which may be significant depending on prevailing market conditions.
- If the counterparties of the instruments used for hedging purpose default, investors of the currency hedged class units may be exposed to currency exchange risk on an unhedged basis and may therefore suffer further losses.
- While hedging strategies may protect investors in the currency hedged class units against a decrease in the value of the Sub-Fund’s base currency relative to the class currency of the currency hedged class units, it may also preclude investors from benefiting from an increase in the value of the Sub-Fund's base currency.
19. RMB currency and conversion risks
- RMB is currently not freely convertible and is subject to exchange controls and restrictions.
- Non-RMB based (e.g. Hong Kong) investors are exposed to foreign exchange risk and there is no guarantee that the value of RMB against the investors' base currencies (for example HKD) will not depreciate. Any depreciation of RMB could adversely affect the value of investor's investment in the Sub-Fund.
- Although offshore RMB (CNH) and onshore RMB (CNY) are the same currency, they trade at different rates. Any divergence between CNH and CNY may adversely impact investors.
- Under exceptional circumstances, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB.