E Fund RMB Fixed Income Fund A Dis RMB

易方達人民幣固定收益基金 A類 Dis 人民幣

HK0000102118

Risk Rating: Level 4

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 three (3) or four (4), these are mainly aimed at providing income and capital appreciation to investors by investing primarily in balanced portfolio, including high yield bonds and global equities etc. For more details, please refer to the Due Diligence section under the Procedures page.

Non-dealing Hours

Dealing Information

Secure Transaction

Derivatives knowledge not required

HKD4,000.00Min. Subscription

1.00%

HKD4,000.00Min. Subscription

RMB

HKD4,000.00Min. Subscription

HKD4,000.00

HKD4,000.00

Daily

15:30

-

*Not include dividends (If applicable)

Fund Performances (including dividend, if any)

1 mth
+0.16%
3 mth
+0.59%
6 mth
+1.49%
1 yr
+7.05%
3 yr
+8.16%
5 yr
+25.44%

Analytical Figures (3 years)

Annualized Return
+2.65%
Annualized Volatility
+1.95%
Sharpe Ratio
+0.78

Fund Information

Fund Houses
E Fund Management (HK) Co., Ltd. (RQFII Funds)
Launch Date
2012-02-27
Fund Manager
Sabrina Wang and Jeffrey Qi
Manager Start Date
2013-02-28
Geographical Focus
China
Asset Class/ Sector
Fixed Income - Hybrid
Risk Rating
Risk Level 4

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 three (3) or four (4), these are mainly aimed at providing income and capital appreciation to investors by investing primarily in balanced portfolio, including high yield bonds and global equities etc. For more details, please refer to the Due Diligence section under the Procedures page.

Fund AUM(As of 2015-12-30)
RMB 885,700,000
Management Fee
1.00%
Latest Dividend
RMB 3.000000 (2016-06-21)

Sector Leaders

    No Funds

Dealing Information

Secure Transaction

Derivatives knowledge not required

HKD4,000.00Min. Subscription

1.00%

HKD4,000.00Min. Subscription

RMB

HKD4,000.00Min. Subscription

HKD4,000.00

HKD4,000.00

Daily

15:30

-

Dividend Records

Dividend DateDividend Records (RMB)
2016-06-213.000000
2015-12-224.000000
2015-06-184.000000
2014-12-153.500000
2014-07-091.500000
2013-12-100.500000
2013-07-011.500000
2013-01-032.000000
2012-07-021.000000

Investment Objective

E Fund RMB Fixed Income Fund seeks to achieve long term capital growth in RMB terms through investment in a portfolio consisting primarily of RMB denominated and settled fixed income debt instruments issued or distributed within China which aim to generate a steady flow of income in addition to capital appreciation for the Sub-Fund.
The Sub-Fund may invest in urban investment bonds (城投債) (i.e. debt instruments issued by local government financing vehicles (“LGFVs”) and traded in the PRC exchange-traded bond markets and inter-bank bond market). These LGFVs are separate legal entities established by local governments and/or their affiliates to raise financing for local development, public welfare investment and infrastructure projects. The exposure to urban investment bonds (城投債) may be up to 100% of the Sub-Fund’s Net Asset Value.

Nature and Extent of Risks

nvestment involves risks. Please refer to the Explanatory Memorandum for details including the risk factors.
1. Investment risk
The Sub-Fund is an investment fund and not a bank deposit. There is no guarantee of the repayment of principal.
There is also no guarantee of dividend or distribution payments during the period you hold the units of the Sub-Fund.
The instruments invested by the Sub-Fund may fall in value and therefore your investment in the Sub-Fund may suffer losses.
2. RMB currency risk
RMB is currently not freely convertible and is subject to exchange controls and restrictions and investors may be adversely affected by movements of the exchange rates between Renminbi and other currencies.
There is no guarantee that RMB will not depreciate. If you convert Hong Kong Dollar or any other currency into RMB so as to invest in the Sub-Fund and subsequently convert the RMB redemption proceeds back into Hong Kong Dollar or any other currency, you may suffer a loss if RMB depreciates against Hong Kong Dollar or other currency.
3. Risks relating to China market / Single Country Investment Risk
China is considered as an emerging market and investing in China may subject the Sub-Fund to higher economic, political, social, legal and regulatory risks than more developed economies or markets. Investments in China may also be less liquid and more volatile.
The Sub-Fund invests primarily in securities related to the China market and may be subject to additional concentration risk
The China debt securities market may be subject to higher volatility compared to more developed markets. The prices of securities traded in such market may be subject to fluctuations.
4. PRC tax risk
In light of a recent notice issued by the Ministry of Finance of the PRC, the State Administration of Taxation of the PRC and the China Securities Regulatory Commission under Caishui [2014] No.79, the Manager, acting in the best interest of Unitholders, assesses the WIT provisioning approach. The Manager, after carefully considered the assessment and having taken and considered independent professional tax advice, does not make provision for gross realised or unrealised capital gains derived from the trading of PRC equity investment (including China A-Shares)from 8 December 2014 onwards.
As for realised capitals gains derived from trading of PRC equity investment (including China A-Shares) via RQFII before 17 November 2014, certain tax relief is applicable to Hong Kong tax residents under the China-HK Arrangement. Pursuant to the relevant PRC tax regulations, to enjoy relief under the China-HK Arrangement, a Hong Kong tax resident should submit to the relevant PRC tax authority a HKTRC issued by the IRD. On 27 October 2015, the Manager obtained HKTRCs for the Sub-Fund for each calendar year since the Sub-Fund’s inception to the calendar year ended 31 December 2014. The HKTRCs have been submitted to the Shanghai tax authority for the purpose of applying tax relief on gross realised capital gains derived from trading of PRC A-shares which are non-immovable properties-rich companies under the China-HK Arrangement.
Under current PRC tax law, there are no specific rules or regulations governing the taxation of the disposal of debt securities issued by PRC tax resident enterprises. The tax treatment for investment in debt securities issued by PRC tax residents is governed by the general taxing provisions of the CIT Law. Under such general taxing provision, the Sub-Fund would be potentially subject to 10% PRC WIT on the PRC-sourced capital gains, unless exempt or reduced under relevant double tax treaties.
There is no specific written tax regulations issued by the PRC tax authorities to confirm that gross capital gains on disposal of debt securities is non-PRC sourced and hence not subject to PRC WIT. However, the PRC tax authorities have verbally indicated that capital gains derived from trading of PRC securities are not subject to PRC WIT. As such, the Manager, on behalf of the Sub-Fund, submitted a “nil”basis tax return for gross realised capital gains derived from trading of PRC debt securities to the Shanghai tax authority and the Shanghai tax authority endorsed the said nil basis tax return.
At the request of Shanghai tax authority, the Manager, as the Renminbi Qualified Foreign Institutional Investor (“RQFII”), submitted the requested information and documents on behalf of the Sub-Fund to the Shanghai tax authority in October 2015 to:-
report the WIT payable on gross realised capital gains derived from trading of immovable properties-rich A-shares;
apply for WIT exemption on gross realised capital gains derived from trading of A-shares which are non-immovable properties-rich companies under the China-HK Arrangement
submit a nil basis tax return to report the gross realised capital gains derived from trading of PRC debt securities since inception to 31 December 2014 on the basis that such gains are not subject to PRC WIT
The documents submitted include the HKTRCs for the Sub-Fund as described above, as part of the application for the Shanghai tax authority’s approval for the eligibility of the Sub-Fund to benefit from the China-HK Arrangement. In addition, a “nil” basis tax return for gross realised capital gains derived from trading of PRC debt securities was also submitted to the Shanghai tax authority.
The Shanghai tax authority completed review on the Sub-Funds’ aforesaid tax reporting and tax treaty applications and issued a document on its official web-site notifying the Sub-Funds of the tax treatyapplication result. Shanghai tax authority indicates that it agrees with the Sub-Funds’ tax treaty application submitted. In addition, the Shanghai tax authority also endorsed the nil basis return for gross realised capital gains derived from trading of debt securities.
In light of the aforesaid documents indicating Shanghai tax authority’s agreement to the Sub-Funds’ tax treaty application and endorsed nil basis return for debt securities issued by Shanghai tax authority, the Manager considers that:
gross realised capital gains derived from by the Sub-Fund from trading of PRC debt securities since inception to 31 December 2014 are not subject to WIT; and
gross realised capital gains derived by the Sub-Fund from trading of PRC equity investment (including China A-Shares) since inception to 16 November 2014 , except for China A-Shares issued by immovable properties-rich companies, are eligible for WIT exemption under the China-HK Arrangement.
Therefore, the Manager has determined that no provision for WIT will be made on gross realised or unrealised capital gains derived from trading of PRC debt securities with effect from 4November 2015.
Unitholders should note that the aforesaid tax filing and tax treaty application are made in accordance with the prevailing tax rules and practices of the Shanghai tax authority at the time of submission. The net asset value of the Sub-Fund may require further adjustment to take into account any retrospective application of new tax regulations and development, including change in interpretation of the relevant regulations by the PRC tax authority.
There is a risk that taxes may be levied in the future on the Sub-Fund for which no provision is made, which may potentially cause substantial loss to the Sub-Fund. The Manager will also make a WIT provision of 10% for the account of the Sub-Fund on PRC sourced passive income (such as dividend income or interest income) arise from investments in the PRC Securities. Unit holders may be disadvantaged depending upon the final tax liabilities, the level of provision and when they subscribed and/or redeemed their Units. If no provision is made by the Manager in relation to all or part of the actual tax levied by the SAT in the future, investors should note that the Net Asset Value of the Sub-Fund may be lowered, as the Sub-Fund will ultimately have to bear the full amount of tax liabilities. In this case, the additional amount of tax liabilities will only impact Units in issue at the relevant time, and the then existing Unit holders and subsequent Unit holders will be disadvantaged as such Unit holders will bear, through the Sub-Fund, a disproportionately higher amount of tax liabilities as compared to that borne before the actual tax liabilities are levied.
5. Risks relating to RQFII
The Sub-Fund invests in securities through a RQFII which is subject to applicable regulations imposed by the PRC authorities. Although repatriations by RQFIIs in respect of the Sub-Fund are currently not subject to repatriation restrictions or prior approval, there is no assurance that PRC rules and regulations will not change or that repatriation restrictions will not be imposed in the future. Any restrictions on repatriation of the invested capital and net profits may impact on the Sub-Fund’s ability to meet redemption requests from the Unit holders.
The RQFII rules have been recently announced and are novel in nature –their application may depend on the interpretation of the Chinese authorities. Any changes to the relevant rules may have an adverse impact on investors’ investment in the Sub-Fund.
In the event of any default of either a PRC broker or the RQFII Custodian in the execution or settlement of any transaction or in the transfer of any fund or securities in the PRC, the Sub-Fund may encounter delays in recovering its assets which may in turn impact the net asset value of the Sub-Fund.
The Manager (as RQFII) may from time to time make available RQFII quota for the purpose of the Sub-Fund’s direct investment into the PRC. The Sub-Fund may not have exclusive use of the entire RQFII quota granted by SAFE to the RQFII (i.e. the Manager), as the RQFII may in its discretion allocate RQFII quota which may otherwise be available to the Sub-Fund to other public fund products under the Manager’s management. Subject to SAFE’s approval, the Manager may also allocate RQFII quotas to other non-public fund products and/or accounts. There can be no assurance that the RQFII can allocate sufficient RQFII quota to the Sub-Fund to meet all applications for subscription of Units in the Sub-Fund.
6. Risks relating to debt securities
The Sub-Fund mainly invests in RMB denominated debt securities and these instruments may fall in value. Investors may suffer losses as a result. Investment in the Sub-Fund is subject to risks that apply to debt securities as follows:
Credit risk
The Sub-Fund is exposed to the credit/insolvency risk of issuers of the RMB denominated debt securities it invests in. Such securities are typically unsecured debt obligations and are not supported by collateral. The Sub-Fund is therefore fully exposed to the credit/insolvency risk of its counterparties as an unsecured creditor.
Some of the RMB denominated debt securities may be unrated. Lower rated / unrated securities would generally be considered to have a higher degree of counterparty risk, credit risk and liquidity risk than higher rated, lower yielding securities.
Risks relating to credit rating
The rating criteria and methodology used by Chinese local rating agencies may be different from those adopted by most of the established international credit rating agencies. Therefore, such rating system may not provide an equivalent standard for comparison with securities rated by international credit rating agencies.
Downgrading risk
Securitiesrated BBB-or above may be subject to the risk of being downgraded to BB+ or below as rated by one of the credit rating agencies in China at the time the debt instrument is invested.In the event of downgrading in the credit rating of a debt security or issuer relating to a debt security, the Sub-Fund’s investment value in such security may be adversely affected.If the Sub-Fund continues to hold such securities, it will be subject to additional risk of loss. The Manager may or may not be able to dispose of the debt instruments that are being downgraded.
Interest rates risk
Generally, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise. The Chinese government’s macro-economic policies and controls will have significant influence over the capital markets in China. Changes in fiscal policies, such as interest rates policies, may have an adverse impact on the pricing of debt securities, and thus the return of the Sub-Fund.
Valuation risk
Valuationof the Sub-Fund’s investments may involve uncertainties and judgmental determinations, and independent pricing information may not at all times be available. If such valuations should prove to be incorrect, the Net Asset Value of the Sub-Fund may be adversely affected.
Liquidity risk
The RMB denominated debt securities market is at a developing stage and the trading volume may be lower than those of the more developed markets. The Sub-Fund may invest in debt securities which are not listed. Even if the debt securities are listed, the market for such securities may be inactive. The Sub-Fund is therefore subject to liquidity risks and may suffer losses in trading such instruments. The bid and offer spreads of the price of such securities may be large, so the Sub-Fundmay incur significant trading and redemption costs and may suffer losses accordingly.
Risk associated with urban investment bonds (城投債)
Urbaninvestment bonds (城投債) are issued by local government financing vehicles (“LGFVs”). Although local governments may be seen to be closely connected to urban investment bonds (城投債), such bonds are typically not guaranteed by local governments or the central government of the PRC. As such, local governments or the central government of the PRC are not obliged to support any LGFVs in default. In the event that the LGFVs default on payment of principal or interest of the urban investment bonds (城投債), the Sub-Fund could suffer substantial loss and the Net Asset Value of the Sub-Fund could be adversely affected.
7. Currency conversion risk
Wherean investor subscribes for units of the Sub-Fund denominated in a non-RMB currency, the Manager will convert such subscriptions into RMB prior to investment at the applicable exchange rate and subject to the applicable spread. As RMB is not freely convertible, currency conversion is subject to availability of RMB at the relevant time (i.e. it is possible there is not sufficient RMB for currency conversion in case of sizeable subscriptions). Currency conversion is also subject to the Sub-Fund’s ability to convert the proceeds denominated in RMB into non-RMB currency which, in turn, might affect the Sub-Fund’s ability to meet redemption requests from the Unitholders or delay the payment of redemption proceeds.
In calculatingthe NetAsset Value of units of the Sub-Fund denominated in a non-RMB currency, the Manager will apply the CNH exchange rate (i.e. the exchange rate for the offshore RMB market in Hong Kong). There may be significant trading costs incurred and investing in classes of units of the Sub-Fund denominated in a non-RMB currency may suffer losses. The value of the classes of units of the Sub-Fund denominated in a non-RMB currency is subject to fluctuation in the CNH rate. In particular, where the CNH rate is at a premium to the CNY exchange rate, any currency conversion at the CNH rate will adversely affect the value of the relevant class of units of the Sub-Fund denominated in a non-RMB currency in RMB terms.
8. Risks relating to distribution out of capital
Distributions of the Sub-Fund may be paid out of the capital of the Sub-Fund. Investors should note that payment of distributions out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment and such distributions may result in an immediate reduction of the net asset value of the relevant units.

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