Important Risk Disclosure for Taikang Kaitai Investment Grade Bond Fund
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Fund Details

Investment Objective

Taikang Kaitai Investment Grade Bond Fund seeks to provide investors with a return in excess of investment grade bond markets outside the PRC. The Sub-Fund invests primarily in a portfolio of RMB, USD or HKD denominated investment grade fixed income instruments issued outside the PRC.

  • Fixed income securities
  • The Manager will allocate at least 70% of the Net Asset Value of the Sub-Fund to a portfolio of RMB, USD or HKD denominated investment grade fixed income instruments issued outside the PRC, including but not limited to, corporate bonds and government or quasi-government bonds. The issuers of such fixed income instruments are domiciled in, or exercising the predominant part of their economic activity in countries or regions including, but not limited to, Australia, Brazil, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Russia, Singapore, South Africa, Taiwan, Thailand, the EU countries, the Philippines, the PRC, Turkey, UK and US. The Sub-Fund will not invest more than 10% of its Net Asset Value in fixed income instruments issued or guaranteed by a single sovereign issuer.
  • Investment grade fixed income instruments are rated long-term BBB-/Baa3 or above by at least one of the following three credit rating agencies, Fitch, Moody’s and Standard & Poor’s. Before investing in a fixed income instrument, the Manager will first consider the credit rating of such fixed income instrument and if such fixed income instrument does not itself have a credit rating, then reference can be made to the credit rating of the issuer or guarantor (where applicable) of the security, which will be deemed as its credit rating. The Sub-Fund will not invest in convertible bonds.
  • Fixed income instruments will primarily (i.e. at least 70% of the Net Asset Value of the Sub-Fund) be rated investment grade at the time of purchase. In some instances, as a result of rating downgrade, removal of rating or default of the issuer of such instruments after the time of purchase, the Sub-Fund may subsequently hold fixed income instruments which are rated below investment grade (i.e. have a credit rating below BBB-/Baa3 by all of the foregoing credit rating agencies) and unrated debt instruments (i.e. neither the instruments nor their issuers have a credit rating).
  • Up to 30% of the Sub-Fund’s Net Asset Value may be invested in: (i) non-investment grade fixed income instruments; (ii) other investments, including but not limited to money market instruments (e.g. near-cash or cash equivalents such as bank certificates of deposit and negotiated term deposits); and (iii) exchange-traded funds (“ETFs”) and collective investment schemes with similar investment objectives to the Sub-Fund.
  • The Sub-Fund will invest no more than 30% of its Net Asset Value in collective investment schemes. The collective investment schemes will have similar investment objectives to the Sub-Fund. The Sub-Fund may invest in other funds authorized by the SFC or in recognised jurisdiction schemes domiciled in Luxembourg, Ireland and/or the United Kingdom, except that not more than 10% of the Sub-Fund’s Net Asset Value may be invested in non-recognized jurisdiction schemes not authorized by the SFC. The Sub-Fund may invest in collective investment schemes which use Financial Derivative Instruments (“FDI”) primarily/extensively for investment purposes.
  • FDI
  • The Sub-Fund may invest in derivative instruments for hedging purposes only but not for investment purposes. Subject to applicable regulations, derivatives used for hedging purposes may include but are not limited to currency derivatives (e.g. currency forward contracts and foreign exchange swap agreements) and futures (e.g. treasury futures). The Sub-Fund will not invest in structured deposits, structured products or mortgage-backed securities.
  • The Sub-Fund will not enter into securities lending, repurchase / reverse repurchase transactions or similar over-the-counter transactions in respect of the Sub-Fund. The Manager will seek the prior approval of the SFC and provide at least one month’s prior notice to Unitholders before the Manager engages in any such transactions and the Explanatory Memorandum will also be updated accordingly.

  • Investment Allocation
  • The Sub-Fund’s indicative asset allocation is presented in the table below:


Investments Percentage of allocation
(% of Net Asset Value)
Fixed Income securities – by type
- Corporate bonds (investment grade and non-investment grade)
- Government or quasi-government bonds (investment grade and non-investment grade)
50 – 100

0 – 20
Fixed Income securities – by rating
- Investment grade (corporate bonds and government or quasi-government bonds)
- Non-investment grade (corporate bonds and government or quasi-government bonds)
70 – 100

0 – 30
Other
- Money market instruments
- ETFs and other collective investment schemes
0 – 30
0 – 30

  • Investment Strategy
  • The Manager has formulated the following investment strategy for investments in fixed income securities to achieve the Sub-Fund’s investment objective.
  • Duration strategy
  • The Manager will perform analysis on fundamentals and forecast the trend of interest rates movements based on a comprehensive analysis of macroeconomic factors as well as the general political environment. It will consider how the fixed income market reacts to the changes of these factors and will actively adjust the average duration of the portfolio securities accordingly.
  • Term structure strategy
  • The Manager will closely monitor and analyse changes in the yield curve by utilising statistical and quantitative techniques, and forecast the pattern of the changes accordingly. The Manager then formulates a yield curve strategy to be implemented for the Sub-Fund, along with projections of regulatory policies and market expectations, and re-allocates the portfolio into securities of different terms (e.g. short-term, medium-term and long-term securities) in a way to adjust exposure to interest rate risks.
  • Sector allocation strategy
  • The Manager will progressively analyse various factors (e.g. credit risks, level of tax liabilities, liquidity) of different types of fixed income instruments (e.g. government / corporate, products with different credit ratings, etc.), and identify fundamental factors that influence the yield spread relationships among these instruments. The Manager will then use these findings to formulate appropriate sector allocation strategies.
  • Individual security selection
  • The Manager will perform thorough fundamental analysis of an issuer including its financial position and, for corporate issuers, the capacity and governance of its management and the market position of the relevant company. Then the Manager will assess the value of the securities concerned, i.e. an analysis on the credit spread of the security and its relative values to other comparable securities, so as to identify and invest in under-valued securities.
Fund Profile
Asset Class Fixed Income Domicile Hong Kong
Dealing Information
Dealing Frequency Daily
Dealing Currency HKD, RMB, USD
Subscription Fee Class A and Class I: up to 5%
Redemption Fee Class A: NIL
Class I: NIL
Switching Charge Class A and Class I: up to 1%
Management Fee Class A: 1.25% p.a.
Class I: 0.6% p.a.
Minimum Initial Subscription Class A – HKD10,000
Class A – RMB10,000
Class A – USD2,000
Class I – HKD1,000,000
Class I – RMB1,000,000
Class I – USD 200,000
Minimum Subsequent Subscription Class A – HKD5,000
Class A – RMB5,000
Class A – USD1,000
Class I – HKD500,000
Class I – RMB500,000
Class I – USD 100,000
Minimum Holding
(Units with aggregate minimum value of:)
Class A – HKD10,000
Class A – RMB10,000
Class A – USD2,000
Class I – HKD 1,000,000
Class I – RMB1,000,000
Class I – USD 200,000
Minimum Redemption Amount
(Units with aggregate minimum value of:)
Class A – HKD10,000
Class A – RMB10,000
Class A – USD2,000
Class I – HKD 500,000
Class I – RMB500,000
Class I – USD 100,000
Inception Date TBC
Launch Price HKD10/RMB10/USD10
Distribution Frequency Monthly (if any)
Trustee, Administrator and Registrar BOCI-Prudential Trustee Limited
Custodian Bank of China (Hong Kong) Limited
ISIN Code TBC
Bloomberg Ticker TBC