BOCHK All Weather
Asian Bond Fund

Investment in funds/sub-funds may involve risks and may not be suitable for all investors. Past performance is not indicative of future results. Investors should read carefully the relevant fund documents for details including but not limited to the risk factors before making any investment decisions. Printed copies of the fund documents or other information of the funds/sub-funds are available from the distributors of the respective funds/sub-funds and BOCHK Asset Management Limited. The above information does not constitute any offer or recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to the investors’ needs.

Market risk

• The Sub-Fund is an investment fund. The Sub-Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal or dividend or distribution payments.

Concentration risk – investments in Asia Pacific markets

• The Sub-Fund focuses its investments in the Asia Pacific region and its portfolio of investments may not be diversified compared to other broad-based funds. It may be subject to additional concentration risk. The value of the Sub-Fund may be more volatile than that of a fund having a more diversified portfolio of assets.
• The value of the Sub-Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Asia Pacific markets.

Emerging markets risk

• The Sub-Fund may be subject to the risks of investing in emerging markets generally, such as greater political, social, foreign exchange, liquidity, regulatory, legal and taxation, settlement and custodian risks.
• As emerging markets tend to be more volatile than developed markets, any holdings in emerging markets are exposed to higher levels of market risk.
• The securities markets of developing countries have a substantially lower trading volume. Investment in such markets will be subject to risks such as market suspension, restrictions on foreign investment and control on repatriation of capital.

Currency risk

• The Sub-Fund may invest in securities quoted in currencies other than the Sub-Fund’s base currency (US Dollar). Also, a class of units may be designated in a currency other than the base currency of the Sub-Fund. The Sub-Fund’s value may fluctuate in response to fluctuations in exchange rates between such currencies and US Dollar and by changes in exchange rate controls.
• Currencies of emerging markets may be more volatile than major world currencies.

Risks relating to debt securities

Credit risk: Investment in debt securities is subject to the credit risk of the issuers which may be unable or unwilling to make timely payments on principal and/or interest.

Risk related to credit ratings: Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuer at all times.

Downgrading risk: Investment grade securities may be subject to the risk of being downgraded. In the event of downgrading, the risks of default may be higher and the value of the Sub-Fund may be adversely affected. The Manager may or may not be able to dispose of the debt instruments that are being downgraded.

Risks associated with debt securities rated below investment grade or unrated: The Sub-Fund may invest in debt securities rated below investment grade or unrated. Such securities are generally subject to lower liquidity, higher volatility and greater risk of loss of principal and interest than high-rated debt securities.

Interest rate risks: Debt securities are sensitive to changes in interest rates. Generally, the prices of debt securities rise when interest rates fall, vice versa. Longer term debt securities are usually more sensitive to interest rate changes.

Sovereign debt risk: The Sub-Fund’s investment in securities issued or guaranteed by governments may be exposed to political, social and economic risks. In adverse situations, the sovereign issuers may not be able or willing to repay the principal and/or interest when due or may request the Sub-Fund to participate in restructuring such debts. The Sub-Fund may suffer significant losses when there is a default of sovereign debt issuers.

Valuation risk: Valuation of the Sub-Fund’s investments may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the Net Asset Value calculation of the Sub-Fund.

Volatility and liquidity risk concerning debt securities in the Asia Pacific markets: The debt securities in Asia Pacific markets may be subject to higher volatility and lower liquidity compared to more developed markets. The prices of securities traded in such markets may be subject to fluctuations. The bid and offer spreads of the price of such securities may be large and the Sub-Fund may incur significant trading costs.

Equity investment/volatility risk

• Prices of equity securities may be volatile. Factors affecting the stock values are numerous, including but not limited to changes in investment sentiment, political environment, economic environment, and the business and social conditions in local and global marketplace.

Risks of investing in other collective investment schemes

• The underlying collective investment schemes in which the Sub-Fund may invest may not be regulated by the SFC. There may be additional costs involved when investing into these underlying collective investment schemes. There is also no guarantee that the underlying collective investment schemes will always have sufficient liquidity to meet the Sub-Fund’s redemption requests as and when made.

Risks of investing in convertible bonds

• Convertible bonds are a hybrid between debt and equity, permitting holders to convert into shares in the company issuing the bond at a specified future date. As such, convertibles will be exposed to equity movement and greater volatility than straight bond investments. Investments in convertible bonds are subject to the same interest rate risk, credit risk, liquidity risk and prepayment risk associated with comparable straight bond investments.

Risks of investing in Exchange-traded funds (ETFs)

• The trading prices of units/shares in an ETF may be at a discount or premium to the net asset value of the units/shares.
• An ETF may not be able to perfectly track the index it is designed to track.

Risks of investing in REITs

• The REITs invested in by the Sub-Fund may not necessarily be authorised by the SFC.
• Real estate investments are relatively illiquid and this may affect the ability of a REIT to vary its investment portfolio or liquidate part of its assets in response to changes in market conditions.
• The Sub-Fund does not invest directly in real estate, and insofar as it directly invests in REITs, any dividend policy or dividend payout at the Sub-Fund level may not be representative of the dividend policy or dividend payout of the relevant underlying REIT.

Risks of investing in ADRs

• Although ADRs have risks similar to the securities that they represent, they may also involve higher expenses and may trade at a discount (or premium) to the underlying security.

RMB hedged class risk and RMB risk

• RMB is currently not freely convertible and is subject to exchange controls and restrictions.
• Non-RMB based investors may incur currency conversion costs and suffer losses depending on the exchange rate movements of RMB relative to Hong Kong dollar or such other currencies.
• Class denominated in RMB will generally be valued with reference to the offshore RMB (CNH) rather than the onshore RMB (CNY). While CNH and CNY represent the same currency, they are traded in different markets. CNH does not necessarily have the same exchange rate and may not move in the same direction as CNY.
• Under exceptional circumstances, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB.

Risks relating to hedging and the hedged classes

• There can be no assurance that any currency hedging strategy employed by the Manager will fully and effectively eliminate the currency exposure of the Sub-Fund.
• Hedging strategies may preclude investors from benefiting from an increase in the value of the Sub-Fund’s base currency.

Risks associated with distribution out of capital

• If payment of dividends is made out of capital or effectively out of capital, it represents a return or withdrawal of part of the amount the investors originally invested or from any capital gains attributable to the original investment. Any distributions involving payment of dividends out of the Sub-Fund’s capital or effectively out of the Sub-Fund’s capital will result in an immediate reduction in the net asset value of the relevant class of Units.