To provide investors with a steady and regular income stream in the form of distributions over the medium to longer term.
06 January 2005
The Fund may be suitable for investors who:
want a meaningful medium to long-term capital growth; and
are relatively conservative with a bias towards receiving regular income.
The Fund will focus on achieving its objective by investing in a diversified portfolio consisting a minimum of 70% of its NAV in debentures, money market instruments and/or depostis. and a maximum of 30% of its NAV in equities. The portfolio composition is aimed at providing investors with a regular income, as well as potential capital growth through price appreciation of its investments.
The Fund’s investment in debentures would consist of government and corporate bonds, and its equity portion would focus on dividend yielding equities.
While we typically take an active trading policy, 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 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.
To achieve its objective, the Fund will also have to flexibility to hold exposure in warrants, as well as collective investment schemes that have similar investment objective to the Fund.
For the Fund’s exposure into debentures, the Fund will hold the ability to access investment opportunities through issuances made in global markets. While the Fund’s exposure into equities will have a similar flexibility, we will look towards a minimum of 80% of the Fund’s equity exposure into companies listed within the Asia Pacific ex Japan region, and have the flexibility to invest up to 20% of the Fund’s equity exposure into companies listed on global markets outside the Asia Pacific ex Japan region.Nevertheless, the Fund will invest only into countries where the regulatory authorities are ordinary or associate members of the International Organization of Securities Commissions (IOSCO).
Derivative trades may be carried out for hedging purposes through financial instruments including, but not limited to, forward contracts, futures contacts and swaps. Future and forward contracts are generally contracts between two parties to trade an asset at an agreed price on a pre-determined future date. Swaps, whereas, is an agreement to swap or exchange two financial instruments between two parties.
The intention of hedging is to protect the value of the asset from any adverse price movements. For example, to hedge against foreign currency exchange risk, the Fund may enter into a currency forward contact to offset any adverse foreign currency movements by determining an agreed rate for an agreed tenure with its counterparty. While these hedging transactions would protect Fund against potential losses, trades for hedging purposes would also limit the returns that the Fund may have potentially received from foreign exchange gains would the Fund not have hedged its foreign currency exposure.
We may also invest into structured products such as, but not limited to, equity linked notes, and credit linked notes. Investment into these structured products 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, in the case of an equity linked note, the stock that the equity linked note is linked to. As a result, any fluctuation in the price of the structured product may also lead to fluctuations in the NAV of the Fund i.e. if the price of the structured product sees a drop in price, the NAV of the Fund will also be negatively impacted. As the note is structured by an external party, investments into a structured product will also expose the Fund to counterparty risk, which we will attempt to mitigate by carrying out a stringent selection process on its counterparty prior to an investment being made. Risk into structured products will also be mitigated by limiting the Fund’s total exposure to not more than 10% of the Fund’s NAV.
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 financial markets. To manage the risk of the Fund, we may shift the Fund’s focus and hold a higher exposure into lower risk investments such as money market instruments and/or deposits.