The Fund aims to achieve its investment objective by investing at least 80% of its Net Asset Value in Regulated Markets in Asia, including and not limited to China, Korea, Indonesia, India, Hong Kong, Philippines, Malaysia and Singapore. Exposure to each of these jurisdictions will be achieved indirectly through over-the-counter USD debt securities settled in Euroclear and Clearstream. In respect of India exposure may also be gained indirectly through investment in Credit-linked Notes. The Fund may invest more than 30% of its Net Asset Value in Emerging Markets.
The diversified portfolio would comprise of Treasury Bonds, Convertible Bonds, Urban Investment Bonds, Senior Bonds, Subordinated Bonds, Perpetual Debt Instruments, CoCos and Tier 2 Bonds, government and/or corporate bonds (which will be fixed and/or floating rate) traded on a Regulated Market (collectively "Debt Securities") and Rule 144A Securities, Regulation S Securities (provided they comply with Regulation 68 of the Regulations), as well as CIS, which are exchange traded funds and CIS providing exposure to eligible Debt Securities indices.
The minimum percentage of Debt Securities comprising the portfolio is 80% of the Net Asset Value. At least 70% of Fund’s Net Asset Value will be invested in Non-Investment Grade Instruments. Up to 35% of the Fund's Net Asset Value will be invested in unrated Debt Securities, comprising of corporate bonds.
The Fund can invest up to 30% of its Net Asset Value in Regulated Markets in Asia, including and not limited to mainland China’s fixed income Debt Securities listed or traded on CIBM via Bond Connect. The remaining Fund's Net Asset Value will be invested in Debt Securities and exchange traded funds (as listed above) in Regulated Markets and unregulated markets in Asia (the investment in unregulated markets in Asia being limited to 10% of NAV), including but not limited to China, Korea, Indonesia, India, Hong Kong, Philippines, Malaysia and Singapore.
The Fund may invest:
• up to 10% of its Net Asset Value in Urban Investment Bonds;
• up to 10% of its Net Asset Value in Convertible Bonds;
• up to 5% of its Net Asset Value in CoCos;
• up to 10% of its Net Asset Value Tier 2 Bonds;
• up to 10% of its Net Asset Value non-preferred Senior Bonds;
• up to 5% of its Net Asset Value in Credit-linked Notes; and
• up to 10% of its Net Asset Value in open-ended exchange traded CIS and eligible index CIS providing exposure to Debt Securities.
The Fund's investments are subject to an overall 10% investment limit of the Net Asset Value in transferable securities, eligible closed-ended funds and money market instruments in accordance with the asset classes identified above which are not listed, traded or dealt in on a Regulated Market.
The Fund is actively managed without reference to a benchmark. Investments in the portfolio are not specifically selected from the constituents of a benchmark, hence the Fund's investment policy is in no way constrained.
Financial Derivative Instruments
The Fund will use financial derivative instruments ("FDI") for investment and hedging purposes as defined in the FDI table. The Fund can hedge currency exposures using FDIs, such as Forward Currency Exchange Contracts and Non-deliverable Forwards, limited to 30% of its Net Asset Value. The Fund’s net derivative exposure may be up to 30% of the Fund’s Net Asset Value.
Securities Financing Transactions
The Investment Manager may enter into Securities Financing Transactions, namely repurchase transactions, subject to and in accordance with the conditions and limits set out in the Prospectus and the Central Bank UCITS Regulations for efficient portfolio management with a level of risk which is consistent with the risk profile of the Fund and the UCITS risk diversification rules.
The maximum and expected percentages of the Net Asset Value of the Fund that can be subject to repurchase transactions are 20% and 5% respectively. The expected percentage is not a limit and the actual percentage may differ from the expected percentage over time, depending on factors including, but not limited to, market conditions (such as a financial crisis).
The Fund does not engage in reverse repurchase transaction.
The Fund may invest up to 100% of its Net Asset Value in cash and other money market instruments including certificates of deposit, Treasury Bills and commercial paper issued by highly rated (Investment Grade or higher) corporate or sovereign issuers ("Liquid Instruments") which are traded in Regulated Markets (and up to 10% of its Net Asset Value in Liquid Instruments which are not listed, traded or dealt in on a Regulated Market) for cash flow purposes or where the Investment Manager believes that economic, financial and political conditions make it advisable to do so and it would not be in the best interests of the Shareholders to be fully invested or where the Fund needs to maintain liquidity to meet redemption requests.
With regard to the investment in CIS providing exposure to eligible Debt Securities indices, all such indices to which exposure may be gained, will comprise of eligible assets and comply with the risk spreading rules applied to direct investment in equities in accordance with the requirements of the UCITS Regulations and will also comply with the Central Bank's UCITS Regulations, the Central Bank's guidance on UCITS Financial Indices and the ESMA Guidelines on exchange traded funds and other UCITS issues ("Index Requirements"). The indices are publically available and are revised and rebalanced periodically to ensure they continue to reflect the market they represent. The indices' criteria are publically available and in accordance with the Index Requirements. The indices represent the Debt Securities markets in which the Fund predominantly invests. The Investment Manager may invest in any number of CIS providing exposure to publically available indices not managed by the Investment Manager to complement the investment policy of the Fund. Accordingly, it is not possible to provide a definitive list of indices in which the CIS (in which the Fund invest) may invest in. Additional information on the indices, rebalancing frequencies and the effects of these on the costs within the index that may be invested in by the Fund, through the CIS, can be obtained from the Investment Manager upon request.