Objective:The Sub-Fund’s objective is to invest in short-term deposits and high quality money market investments. The Sub-Fun... Show All Objective:The Sub-Fund’s objective is to invest in short-term deposits and high quality money market investments. The Sub-Fund seeks to achieve a return in Hong Kong Dollars in line with prevailing money market rates, with primary considerations of both capital preservation and liquidity. There can be no assurance that the Sub-Fund will achieve its investment objective. Strategy:The Sub-Fund will invest at least 70% of its net asset value (“NAV”) in Hong Kong Dollars (“HKD”) denominated and settled short-term deposits and high quality money market instruments issued by governments, quasi-governments, international organisations and financial institutions. High quality money market instruments include debt securities, commercial papers, certificates of deposits and commercial bills. In assessing whether a money market instrument is of high quality, at a minimum the credit quality and the liquidity profile of the money market instruments will be taken into account. The Sub-Fund will invest less than 30% of its NAV into non-HKD-denominated and settled short-term deposits and high quality money market instruments. The Manager may hedge any non-HKD-denominated and settled investments into HKD to manage any material currency risk. The value of the Sub-Fund’s holding of investments in the form of short-term and high quality asset-backed securities subject to the same criteria as set out below for selection of debt securities, such as mortgage backed securities and asset backed commercial papers, may not exceed 15% of its NAV. The asset allocation of the Sub-Fund will change according to the Manager’s view of market conditions and the international investment trends and environment. The Manager will assess the yield of money market instruments, and will take into consideration factors such as currency risk, credit/counterparty risk liquidity, costs, timing of execution and the relative attractiveness of individual securities and issuers in the market. The debt securities that may be invested by the Sub-Fund include but are not limited to government bonds, fixed and floating rate bonds. Other than the general criteria described above, the Manager will also consider the following in selecting high quality debt securities: 1. Credit quality: the Sub-Fund will only invest in debt securities rated investment grade or above by an independent rating agency, e.g. Fitch, Moody’s, Standard and Poor’s. A short-term debt security is considered investment grade if its credit rating is A-3 or higher by Standard & Poor’s or F3 or higher by Fitch Ratings or P-3 or higher by Moody’s or equivalent rating as rated by one of the international credit rating agencies. 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 such debt security.2. Maturity: Out of investments that fulfil the criteria on credit rating, the portfolio will be constructed out of investments with a target maturity of around 60 days (or below), subject to the overall limit in weighted average maturity, weighted average life and remaining maturity of the portfolio as described below.3. Liquidity: Investments that satisfy the above requirements will be assessed based on liquidity. The Manager will assess the liquidity of the investments based on historical liquidity of similar debt securities, by assessing the days to liquidate for such instruments. Only instruments with high liquidity will be included in the portfolio of the Sub-Fund.There is no specific geographical allocation of the country of issue of the debt securities or deposits, except that the Sub-Fund will not invest more than 30% of its NAV in emerging markets. Countries or regions in which the Sub-Fund may invest in include Hong Kong, the PRC, Japan, Korea, Australia, Canada, the United Kingdom, the European Union and the United States. The Sub-Fund may invest less than 30% of its NAV into onshore Mainland China markets through available means, including, but not limited to, the PRC inter-bank bond market under the mutual bond market access between Hong Kong and Mainland China and the regime allowing foreign institutional investors to invest in the PRC inter-bank bond market. The onshore Mainland China securities that may be invested by the Sub-Fund include but are not limited to negotiable certificates of deposits, treasury bonds, policy bank bonds, and local government bonds. The aggregate value of the Sub-Fund’s holding of instruments and deposits issued by a single entity will not exceed 10% of the total NAV of the Sub-Fund except: (i) where the entity is a substantial financial institution and the total amount does not exceed 10% of the entity’s share capital and non-distributable capital reserves, the limit may be increased to 25%; or (ii) in the case of government and other public securities, up to 30% may be invested in the same issue; or (iii) in respect of any deposit of less than USD1,000,000 or its equivalent in HKD, where the Sub-Fund cannot otherwise diversify as a result of its size. The Sub-Fund will maintain a portfolio with weighted average maturity not exceeding 60 days and a weighted average life not exceeding 120 days. The Sub-Fund will not purchase an instrument with a remaining maturity of more than 397 days, or two years in the case of government and other public securities. The Sub-Fund may borrow up to 10% of its NAV but only on a temporary basis for the purpose of meeting redemption requests or defraying operating expenses. The Sub-Fund will not write any options. The Sub-Fund may enter into repurchase transactions for up to 10% of its NAV. Repurchase transactions are transactions where the Sub-Fund sells securities such as bonds for cash and simultaneously agrees to repurchase the securities from the counterparty at a pre-determined future date for a pre-determined price. A repurchase transaction is economically similar to secured borrowing, with the counterparty of the Sub-Fund receiving securities as collateral for the cash that it lends to the Sub-Fund. It is the intention of the Manager to sell the securities for cash equal to the market value of the securities provided to the counterparty. Cash obtained in repurchase transactions will be used for meeting redemption requests or defraying operating expenses, but will not be re-invested. The Sub-Fund currently has no intention to invest in structured deposits, structured products or over-the-counter securities, or to take any short positions, and the Manager will not enter into any securities lending or reverse repurchase transactions. The Sub-Fund will not invest in instruments with loss-absorption features (such as contingent convertible bonds or senior non-preferred debt), or in other collective investment schemes. The Sub-Fund will only invest in financial derivative instruments for hedging purposes only. If any of this changes in the future, prior approval of the SFC will be sought and not less than one month’s notice will be provided to Unitholders before the Sub-Fund enters into any such transaction. |