• Investment Objective
The Sub-Fund seeks to provide investors with a stableconsistent investment return over the medium to long term by investing primarily in investment-grade debt securities globally.
• Policy
The Sub-Fund will primarily (i.e. at least 70% of its NAV) invest in investment grade debt securities globally. The Sub-Fund may invest up to 30% of its NAV in below investment gradeunrated debt securities, which in the opinion of the Manager are suitable for achieving the investment objective of the Sub-Fund.
“Investment grade” means either a rating of BBB-above from Standard & Poor’sFitch, Baa3above from Moody’san equivalent rating from any internationally recognized credit rating agency,a rating of AAAabove from a mainland Chinese credit rating agency. For this purpose, if the relevant debt security does not itself have a credit rating, then reference can be made to the credit rating of the issuer of the debt security.
“Unrated debt security” means a debt security which neither itself nor its issuer has a credit rating from Standard & Poor’s, Fitch, Moody’s, any internationally recognized credit rating agencyany mainland Chinese credit rating agency.
The Manager will assess the credit risks of the fixed income instruments based on quantitativequalitative fundamentals, including without limitation, the issuer’s leverage, operating margin, return on capital, interest coverage, operating cash flows, industry outlook, firm’s competitive positioncorporate governance issue.
The debt securities in which the Sub-Fund may invest include (but are not limited to) long-term bonds, medium-term notes, bills, convertible bonds, contingent convertible bonds ("CoCos”), subordinated debt, Dim Sum bonds (i.e. bonds issued outside of mainland China but denominated in RMB), asset-backed debt securities, mortgage-backed securities, asset-backed commercial paper, certificate of depositscommercial papers.
The Sub-Fund may invest less than 30% of its NAV in asset-backed debt securities, mortgage-backed securitiesasset-backed commercial papers,less than 30% of its NAV in Dim Sum bonds.
The Sub-Fund may invest less than 20% of its NAV in onshore mainland China debt securities market (including urban investment bonds) (via the Bond Connect, the China Interbank Bond Market (“CIBM”)using the QFI (defined in the Prospectus) status of the Managerthrough investment in other collective investment schemessuch other means as may be permitted under applicable lawsregulations from time to time). Urban investment bonds are debt instruments issued by mainland local government financing vehicles (“LGFVs”). These LGFVs are separate legal entities established by local governments and/or their affiliates to raise financing for public welfare investmentinfrastructure projects.
The Sub-Fund is not subject to any limitation on the portion of its NAV that may be invested in any one countryregion,the weight in one country may go up to 100% of the Sub-Fund’s NAV. The countriesregions in which the Sub-Fund may invest include, but are not limited to: Asia (including the Greater China region), US, European countries, which may include emerging markets.
The Sub-Fund will not focus its investment in any specific industriessectors although the allocation in certain industrysector may be relatively significant, depending on the Manager’s assessment at different times.
The Sub-Fund may invest less than 30% of its NAV in debt instruments with loss-absorption features (i.e. debt instruments issued by a holding company of a financial institution with features of contingent write-downcontingent conversion to ordinary shares on the occurrence of (i) when a financial institution is nearat the point of non-viability,(ii) when the capital ratio of a financial institution falls to a specified level). These include CoCos, non-preferred senior debt instrumentsAdditional Tier 1Tier 2 capital instruments that meet the qualifying criteria under the Banking (Capital) Rulesan equivalent regime of non-Hong Kong jurisdictions. The Sub-Fund will dispose of the foregoing ordinary shares as soon as possible takingaccount the market conditions at that time.
The Sub-Fund will not invest more than 10% of its NAV in securities issued by and/or guaranteed by any single sovereign issuer (including its government, a publiclocal authority of that country) with a credit rating below investment gradeunrated.
The Sub-Fund will invest not more than 10% of its NAV in preferred shares. Save for preferred shares, the Sub-Fund does not intend to invest in other equity securities. However, depending on the market conditions, there may be a possibility that the Manager will convert the invested convertible bonds (or similar instruments) to equities to realize the profits. In this case, the equities will be sold as soon as possible takingaccount the market conditions at that time.
Under exceptional circumstances (e.g. market crashmajor crisis), the Sub-Fund may invest temporarily up to 100% of its NAV in cashcash equivalents for cash flow managementdefensive purposes.
The Sub-Fund may entersalerepurchase transactionsthe expectedmaximum level of the Sub-Fund’s assets available for the salerepurchase transactions is 30% of its NAV.
The Sub-Fund does not intend to engage in securities lendingreverse repurchase transactions.
The Sub-Fund may employ financial derivative instruments such as futuresforwards for hedging and/or investment purposes.
