Investment involves risks. Please refer to the Explanatory Memorandum for details including the risk factors.
1. Market risk
The Sub-Fund’s investments are subject to the risks inherent in all securities, including the fact that the value of holdings may go down as well as up. In particular, dividend yields from the Sub-Fund’s investments may fluctuate up or down as a result of changes in the dividend policy of the underlying companies in which the Sub-Fund is invested. Such changes will impact the level of dividend available for distribution by the Sub-Fund.
2. Dividend paid effectively out of capital
In respect of the Income Class Units, the Manager may at its discretion pay dividend out of gross income while paying all or part of the fees and expenses attributable to the Income Class Units out of the capital of such Units, resulting in an increase in distributable income for the payment of dividend by the Income Class Units and therefore, the SubFund may effectively pay dividend out of capital. This amounts to a return or withdrawal of part of a Unitholder’s original investment in the Income Class Units or from any capital gains attributable to that original investment. Any distributions involving payment of dividend effectively out of the capital of the Income Class Units may result in an immediate reduction of its net asset value per unit.
3. Specific risks in investing in emerging markets
Various countries in which the Sub-Fund may invest, including but not limited to the following countries: China, Indonesia, Malaysia, Philippines and Thailand, are considered as emerging markets. As emerging markets tend to be more volatile than developed markets, any holdings in emerging markets are exposed to higher levels of market risk. The securities markets of some of the emerging countries in which the Sub-Fund’s assets may be invested are not yet fully developed which may, in some circumstances, lead to a potential lack of liquidity. Accounting, auditing and financial reporting standards in some of the emerging markets in which the Sub-Fund’s assets may be invested may be less vigorous than international standards. As a result, certain material disclosures may not be made by some companies. As a result, the Sub-Fund/investors may be adversely impacted.
4. Currency risk
The performance of the Sub-Fund may be affected by movements in the exchange rate between the currencies in which the Sub-Fund’s assets are held and the base currency of the Sub-Fund. The Sub-Fund will have exposure to fluctuations in currency exchange rates where it invests directly or indirectly in securities denominated in currencies other than US dollars. It may, in part, seek to offset the risks associated with such exposure through foreign exchange transactions. The markets in which foreign exchange transactions are effected are highly volatile, highly specialised and highly technical. Significant changes, including changes in liquidity and prices, can occur in such markets within very short periods of time, often within minutes. Foreign exchange trading risks include, but are not limited to, exchange rate risk, interest rate risk and potential interference by foreign governments through regulation of local exchange markets, foreign investment, or particular transactions in foreign currency. As a result, the Sub-Fund/investors may be adversely impacted.
5. Concentration Risk
The Sub-Fund’s investments may be concentrated in the markets of smaller economies and the investment performance is sensitive to movements in these markets. Therefore, the performance of the Sub-Fund may differ significantly in direction and degree from the overall global stock market performance. As a result, the Sub-Fund/investors may be adversely impacted.