The Fund aims to provide investors with regular income through investments in Shariah-compliant fixed income instruments.
14 December 2015
United States Dollar
This Fund is suitable for you if you:-
· seek income through investment in a portfolio of Shariah-compliant fixed income instruments;
· have a medium to long term investment horizon; and
· have a moderate risk tolerance.
To achieve its objective, the Manager intends to invest a minimum of 70% of the Fund’s NAV in a portfolio of Shariah-compliant fixed income instruments issued and/or offered globally, which consists of investment grade Sukuk and Islamic money market instruments that provide regular income. The Manager will also invest a maximum of 30% of the Fund’s NAV in Islamic liquid assets. The Fund will invest principally in a portfolio of Shariah-compliant fixed income instruments (including non-investment grade securities and unrated securities) including Sukuk al-Ijara and Sukuk al-Wakala issued by government, government-related and corporate entities located globally.
We will combine a top-down and bottom-up investment approach to identify investment opportunities. Macroeconomic trends and market analysis are the important considerations in deriving the top-down perspective on interest rate outlook, fixed income markets and currency movements. For its bottom-up approach, we would conduct analysis on the issuer(s) to assess its ability to service its financial obligations.
The selection of Sukuk will not be constrained by credit ratings of issuances. However, the selection will depend largely on its quality where the respective issuers display strong ability to meet their financial obligations, healthy cash-flow, the collateral type, value, claims priority as well as offer highest safety for timely payment of interest and principal.
The Fund will be actively managed, and we look to maintain some core holdings that are held over the medium to long term, which is similar to a buy and hold strategy. We will also maintain a trading portion for the portfolio, which we will use to take advantage by participating in investment opportunities that are set to benefit from prevailing market conditions, with the aim of boosting the Fund’s performance.
The Fund will also have the flexibility to hold exposure in Shariah-compliant collective investment schemes that have a similar investment objective to the Fund.
The Fund may invest in investments listed or issued in foreign markets. The decision to invest into foreign markets will be opportunistically driven where we would seek out investments that could provide a potential to enhance the returns of the Fund. The Fund will invest only into countries where the regulatory authorities are ordinary or associate members of the IOSCO.
Derivative Investments For Hedging Purposes Only
The Fund may employ Shariah-compliant derivatives, such as Islamic cross currency swaps, Islamic profit rate swaps and other Shariah-compliant derivatives that are certified by the SC or Shariah Adviser for hedging purposes. These instruments may be used to hedge the principal and/or the returns of the foreign-currency denominated investments back to the USD. Islamic profit rate swaps could be used by the Manager to hedge the interest rate exposure of the Fund by mitigating the potential decline in the price of the Fund’s Sukuk investment due to the inverse relationship between yields and prices in a rising interest rate environment. While the hedging strategy will assist with mitigating the potential foreign exchange losses by the Fund, any potential foreign exchange gains from the hedging strategy will be capped as well.
The employment of Shariah-compliant derivatives under these circumstances is expected to reduce the impact of foreign currency movements on the Fund’s NAV.
The Fund may also invest into Shariah-compliant structured products in which the underlying security is linked to or derive its value from a security, asset, commodity or currency of any nation. Investment into these Shariah-compliant structured product will provide the Fund with the exposure to the reference asset. Each of these products has its own targeted maturity and will expose investors to the price fluctuations of its underlying security. As a result, any fluctuation in the price of the Shariah-compliant structured product may also lead to fluctuations in the NAV of the Fund i.e. if the price of the Shariah-compliant structured product sees a drop in price, the NAV of the Fund will also be negatively impacted. As the Shariah-compliant structured product is structured by an external party, investments into a Shariah-compliant structured product will also expose the Fund to counterparty risk, which we will to mitigate by carrying out a stringent selection process on its counterparty prior to an investment being made.
Temporary Defensive Position
We hold the option to take temporary defensive positions that may be inconsistent with the Fund’s principal strategy and asset allocation to protect the Fund against adverse market conditions that may impact the financial markets. To manage the risk of the Fund, we may shift the Fund’s assets to be temporarily invested in Islamic money market instruments and/or Islamic fixed deposits.
% NAV of the Fund
Shariah-compliant fixed income instruments
Islamic liquid assets*
* Islamic liquid assets will include Islamic current deposits and Islamic fixed deposits with Financial Institutions.
Minimum Initial Investment
Minimum Additional Investment
Minimum Units Held
FEES & CHARGES
Sales Charge per Unit
Up to 2.00% of the Initial Offer Price of a Class during the Initial Offer Period and the NAV per Unit of a Class.
Annual Management Fee
Up to 1.20% per annum of the NAV of the Fund.
Annual Trustee Fee
Up to 0.06% per annum of the NAV of the Fund (excluding foreign custodian fees and charges).