Huatai Global Investment Fund – Huatai RMB Money Market Fund
(Fund Type：Hong Kong Umbrella Unit Trust)Important Notes：
Investment involves risks, including the loss of principal. The price of units or shares of the Sub-Fund may go up as well as down. Past performance is not indicative of future results. The value of the Funds can be extremely volatile and could go down substantially within a short period of time. [The Explanatory Memorandum and the Product Key Facts Statement of the Sub-Fund may be obtained from the office of Huatai Financial Holdings (Hong Kong) Limited which is located 53/F., The Center,99 Queen’s Road, Central, Hong Kong and can also be downloaded from this website.] Investors should not ba
Please note:
• Huatai RMB Money Market Fund, being a sub-fund of the umbrella unit trust constituted by the Trust Deed and called Huatai Global Investment Fund. The investment ob
• The Fund and the Sub-Fund(s) have been authorised by the SFC as a collective investment scheme pursuant to section 104 of the SFO. The SFC’s authorisation is not a recommendation or endorsement of the Fund and the Sub-Fund(s) nor does it guarantee the commercial merits of the Fund and the Sub-Fund(s) or their performance. It does not mean the Fund or the Sub-Fund(s) is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
Risk Factors:
Investors should not only ba
1. Investment risk
l The Sub-Fund is an investment fund and not a bank deposit. The Sub-Fund may fall in value due to any of the key risk factors below and therefore investors may suffer losses. There is no guarantee of repayment of capital.
2. Risks associated with debt securities (including money market instruments)
l Short-term debt securities risk - The Sub-Fund invests primarily in debt securities with short maturities. This means the turnover rates of the Sub-Fund’s investments may be relatively high and the transaction costs incurred as a result of the purchase or sale of such securities may increase which in turn may have a negative impact on the net asset value of the Sub-Fund.
l Volatility and liquidity risk - The debt securities in some of the markets in which the Sub-Fund invests 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 spreads of the price of such securities may be large and the Sub-Fund may incur significant trading costs.
l Credit / counterparty risk - The Sub-Fund is exposed to the credit/insolvency risk of issuers of the debt securities that the Sub-Fund may invest in.
l Interest rate risk - Investment in the Sub-Fund is subject to interest rate risk. Generally, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise.
l Credit rating risk - Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the debt security and/or issuer at all times.
l Credit rating agency risk – The credit appraisal system in Mainland China and the rating methodologies employed in Mainland China may be different from those employed in other markets. Credit ratings given by rating agencies in Mainland China may therefore not be directly comparable with those given by other international rating agencies.
l Valuation risk - Valuation of the Sub-Fund’s investments may involve uncertainties and judgmental determinations, and independent pricing information may not at all times be available. If such valuations should prove to be incorrect, this may affect the calculation of the net asset value of the Sub-Fund.
l Downgrade risk - The credit rating of an issuer or a debt security may subsequently be downgraded due to changes in the financial strength of an issuer. In the event of downgrading in the credit ratings of a debt security or an issuer relating to a debt security, the Sub-Fund’s investment value in such security may be adversely affected. The Manager may or may not be able to dispose of the debt securities that are being downgraded.
l Sovereign debt risk - Investment in sovereign debt obligations 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.
l Risk associated with urban investment bonds - Urban investment bonds are issued by LGFVs, such bonds are typically not guaranteed by local governments in Mainland China or the central government of the People’s Republic of China. In the event that the LGFVs default on payment of principal or interest of the urban investment bonds, the Sub-Fund could suffer substantial loss and the net asset value of the Sub-Fund could be adversely affected.
3. Risks associated with bank deposits
l The Sub-Fund will invest in RMB-denominated and non-RMB-denominated short-term deposits, which are subject to the credit risks of the financial institutions that offer and act as counterparties of such deposits. The Sub-Fund may also place deposits in non-resident accounts (NRA), which are onshore deposits treated as offshore deposits with onshore branches of Mainland Chinese banks, and offshore accounts (OSA), which are offshore deposits with offshore account of onshore branches of Mainland Chinese banks. As such deposits may not be protected or fully protected under any deposit protection schemes, a default by the relevant financial institution in respect of the Sub-Fund’s holdings in short-term deposits may result in losses to the Sub-Fund.
4. RMB currency and conversion risk
· RMB is currently not freely convertible and is subject to exchange controls and restrictions.
· Where the Sub-Fund invests in non-RMB denominated investments, the value of such investments may be affected favourably or unfavourably depending on the changes in exchange rate between these currencies and the ba
· There can be no assurance that RMB will not be subject to devaluation. Any devaluation of the RMB could adversely affect the value of investors’ investments in the Sub-Fund.
· Although offshore RMB (CNH) and onshore RMB (CNY) are the same currency, they trade at different rates. The CNH rate may be at a premium or discount to the exchange rate for CNY and there may be significant bid and offer spreads. Any divergence between CNH and CNY may have an impact on the net asset value of the Sub-Fund and thus the investors.
· 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.
5. Mainland China tax risk
· There are risks and uncertainties associated with the current Mainland China tax laws, regulations and practice in respect of the Sub-Fund’s investment in Mainland China. It should also be noted that there is a possibility of Mainland China tax rules being changed and taxes being applied retrospectively. Any increased tax liabilities on the Sub-Fund may adversely affect the Sub-Fund’s value.
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· In case of any shortfall between the provisions and actual tax liabilities, which will be debited from the Sub-Fund’s assets, the Sub-Fund’s net asset value will be adversely affected. The actual tax liabilities may or may not be lower than the tax provision made. Depending on the timing of their subsc
6. Risk associated with CIBM, QFI and Bond Connect
· Investing in the CIBM via direct access regime and/or Bond Connect is also subject to regulatory risks. The relevant rules and regulations on these regimes are subject to change which may have potential retrospective effect. In the event that the relevant Mainland Chinese authorities suspend account opening or trading on the CIBM, the Sub-Fund’s ability to invest in the CIBM will be adversely affected. In such event, the Sub-Fund’s ability to achieve its investment ob
· The Sub-Fund may suffer substantial losses if the approval of the QFI status is being revoked/terminated or otherwise invalidated as the Sub-Fund may be prohibited from trading of relevant securities and repatriation of the Sub-Fund’s monies, or if any of the key operators or parties (including QFI custodian/broker) is bankrupt/in default and/or is disqualified from performing its obligations (including execution or settlement of any transaction or transfer of monies or securities).
7. Concentration risk
l The Sub-Fund will invest primarily in RMB-denominated and settled instruments. Investments in any country or region (e.g. China (onshore and offshore markets)) may also be concentrated from time to time depending on the Manager’s assessment of the market conditions at different times. The value of the Sub-Fund may be more susceptible to adverse political, tax, economic, foreign exchange, liquidity, policy, legal and regulatory risk affecting the RMB money markets and/or the relevant markets in any specific country or region (e.g. China (onshore and offshore markets). The Sub-Fund is therefore likely to be more volatile than a broad-ba
8. Hedging risk
l The Sub-Fund may acquire financial derivatives instruments for hedging and in adverse situations, such hedging may become ineffective and the Sub-Fund may suffer significant losses. The price of a derivative instrument can be very volatile which may result in losses in excess of the amount invested in the derivative instruments by the Sub-Fund. A derivative instrument is subject to the risk that the counterparty of the instrument will not fulfil its obligations to the Sub-Fund, and this may result in losses to the Sub-Fund.
9. Risk associated with distribution out of capital or effectively out of capital
l Payment of distributions out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investments. Any such distributions may result in an immediate reduction of the net asset value per unit.
The Sub-Fund’s ob
A. Primary Investment
The Sub-Fund may invest not less than 70% of its net asset value in RMB-denominated and settled short-term deposits and high quality money market instruments issued by governments, corporations, quasi-governments, international organisations and financial institutions.
The Sub-Fund may invest up to 100% of its net asset value in the Mainland China money market instruments or debt securities market through available means, including but not limited to onshore Chinese debt securities traded on the China interbank bond market (“CIBM”) and the exchange traded bond market through the qualified foreign investor (“QFI”) regime, CIBM direct access regime and/or Bond Connect, or such other means as permitted by the relevant regulatory authorities from time to time. For the avoidance of doubt, the Sub-Fund’s investments made via the QFI regime will be less than 70% of its net asset value.
The Sub-Fund may invest up to 30% of its net asset value in non-RMB-denominated short-term deposits and high quality money market instruments.
High quality money market instruments include debt securities, commercial papers, certificates of deposits, short-term notes 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 instrument must be considered, as follows:
- Credit rating: The Sub-Fund will only invest in (i) debt securities rated investment grade, or (ii) debt securities issued/guaranteed by issuers/guarantors who are rated investment grade. For the purposes of the Sub-Fund, “investment grade” means a short-term credit rating of A-2 or above by Standard & Poor’s or equivalent rating as rated by one of the international credit rating agencies, or (in the absence of a short-term credit rating only) a long-term credit rating of BBB or above by Standard & Poor’s or equivalent rating as rated by one of the international credit rating agencies.
For the Mainland China onshore debt securities in which the Sub-Fund may invest, “investment grade” means a short-term credit rating of A-1 or above as assigned by one of the local rating agencies recognised by the relevant authorities of Mainland China on the instruments, the relevant issuer or the relevant guarantor (if any), or (in the absence of a short-term credit rating only) a long-term credit rating of AA+ or above as assigned by one of the local rating agencies recognised by the relevant authorities of Mainland China on the instruments, the relevant issuer or the relevant guarantor (if any).
For split credit ratings, the highest rating shall apply.
For the avoidance of doubt, the Sub-Fund does not intend to invest in debt securities with a long term to maturity remaining at the time of investment. The long-term credit ratings will only be considered where the Sub-Fund invests in debt securities which have long-term credit ratings only and no short-term credit ratings, but have a shorter term to maturity remaining (subject to the restrictions on remaining maturity, weighted average maturity and weighted average life of the portfolio of the Sub-Fund as set out below) at the time of purchase by the Sub-Fund.
While the credit ratings provided by the relevant rating agencies serve as a point of reference, the Manager will conduct its own assessment on the credit quality ba
- Weighted average maturity and weighted average life: The Sub-Fund will maintain a portfolio with weighted average maturity not exceeding 60 days and a weighted average life not exceeding 120 days and must 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.
There is no specific geographical allocation of the country of issue of the high quality money market instruments or short-term deposits. However, investments in any country or region (e.g. China (onshore and offshore markets)) may be concentrated and exceed 30% of the Sub-Fund’s net asset value from time to time, depending on the Manager’s assessment of the market conditions at different times. It is not expected that the Sub-Fund will invest in emerging markets other than China.
B. Ancillary Investments
The Sub-Fund may invest up to 10% of its net asset value in money market funds authorised in Hong Kong by the Securities and Futures Commission of Hong Kong (“SFC”) under Chapter 8.2 of the Code on Unit Trusts and Mutual Funds (“Code”) or regulated in a manner generally comparable with the requirements of the SFC and acceptable to the SFC.
The Sub-Fund may also invest less than 30% of its net asset value in short-term and high quality “Dim-Sum” bond (i.e. bonds issued outside of Mainland China but denominated in RMB) and urban investment bonds (i.e. debt instruments issued by the local government financing vehicles (“LGFVs”)). These LGFVs are separate legal entities established by local governments and/or their affiliates to raise financing for public welfare investment or infrastructure projects.
The Sub-Fund may invest up to 15% of its net asset value in asset backed securities, such as mortgage backed securities. Such asset backed securities are issued in regions including but not limited to onshore China and/or Greater China (referring to offshore China, i.e. Hong Kong, Macau and Taiwan), and are rated investment grade by one of the international credit rating agencies.
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 net asset value 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%;
(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 the ba
The aggregate value of the Sub-Fund’s investment in entities within the same group through instruments and deposits will not exceed 20% of its net asset value provided that:
(i) the aforesaid limit will not apply in respect of cash deposit of less than USD1,000,000 or its equivalent in the ba
(ii) 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%.
The Sub-Fund may borrow up to 10% of its net asset value but only on a temporary basis for the purpose of meeting redemption requests or defraying operating expenses. The Sub-Fund will not invest in any convertible bonds or instruments with loss absorption features.
The Sub-Fund may enter into sale and repurchase transactions for up to 10% of its net asset value but only on a temporary basis for the purpose of meeting redemption requests or defraying operating expenses, provided that the amount of cash received by the Sub-Fund under sale and repurchase transactions may not in aggregate exceed 10% of its net asset value. The Sub-Fund will not enter into securities lending and reverse repurchase transactions in respect of the Sub-Fund.
The Sub-Fund may use financial derivative instruments (including interest rate swaps and currency swaps) for hedging purposes only.
| Dealing frequency | Daily | |||||
|---|---|---|---|---|---|---|
| Fund Manager | Huatai Financial Holdings (Hong Kong) Limited | |||||
| Distribution policy |
Distribution Class (Class I Dist RMB Units): |
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| Financial year-end of the Sub-Fund | Dec-31 | |||||
| Management fee |
Class A RMB Units: up to 1% p.a., currently 0.3% p.a. ø |
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| Subsc |
Up to 1% of the amount subscribed | |||||
| Redemption fee | None | |||||
| Minimum Initial investment |
Class A RMB: RMB 0.01 |
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| Minimum Additional investment | Class A RMB: RMB 0.01 Class B RMB: RMB 0.01 Class I RMB: RMB 600,000 Class I Dist RMB：RMB600,000 Class S RMB: RMB0.01 |
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| ISIN | Class A RMB: HK0001093837 Class B RMB: HK0001093845 Class I RMB: HK0001093852 Class I Dist RMB：HK0001093860 Class S RMB: HK0001093878 |
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Huatai Financial Holdings (Hong Kong) Limited is the issuer of this website. The information and materials contained in or accessed through this Website shall not be considered or construed as an offer or solicitation to sell, buy or otherwise deal in or as the giving of any advice in respect of shares, stocks, bonds, notes, interests, unit trusts, mutual funds or other securities, investments, loans, advances, credits or deposits in any jurisdiction.
Investment involves risks, including the loss of principal. The price of units or shares of the Sub-Fund may go up as well as down. Past performance is not indicative of future results. The value of the Sub-Fund can be extremely volatile and could go down substantially within a short period of time. You should read the Sub-Fund’s Explanatory Memorandum and Product Key Facts Statement for details, including risk factors. Investors should not ba
Information contained in this website has not been reviewed by the SFC.
SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.