•CIFM (HK) RMB Diversified Income Fund (The “Fund”) is a sub-fund of CIFM Funds. It is a Hong Kong domiciled umbrella structure unit trust and is governed by the laws of Hong Kong.
•The Fund invests in debt securities and equity securities issued or listed in China through RQFII quota of Manager.
The Sub-Fund is an investment fund. Investing in the Sub-Fund is not the same as deposits with a bank. There is no guarantee of the repayment of principal. Further, there is no guarantee that the investment objective of the Sub-Fund can be achieved.
• There is also no guarantee of dividend or distribution payments during the period you hold the units of the Sub-Fund.
• The value of investments held by the Sub-Fund may fall as well as rise and investors may not get back the original investments.
Risk Relating to Investing in a Single Market / the China Market:
• The Sub-Fund invests primarily in securities related to the China market and may be subject to additional concentration risk. Investment in the China market is subject to emerging market risk including political, economic, legal, regulatory and liquidity risks. The Sub-Fund may also be subject to the risks associated with changes in the PRC laws and regulations, and such changes may have retrospective effect and may adversely affect the Sub-Fund.
• The China debt securities market may be subject to higher volatility compared to more developed markets. The prices of securities traded in such market may be subject to fluctuations.
PRC Tax Risk:
•The Manager will make provisions for any PRC taxes payable by the Sub-Fund on realised and unrealised gains on PRC securities other than equity investments, at a rate of 10%. Such provisions may be excessive or inadequate to meet the actual tax liabilities. In case of any shortfall between the provisions and actual tax liabilities, which will be debited from the Sub-Fund’s assets, the asset value of the Sub-Fund will be adversely affected.
•The Manager will not make provision for gross realised or unrealised capital gains derived from trading of PRC equity investment (including China A-Shares) from 17 November 2014 onwards.
Risks Relating to RQFII :
• The Sub-Fund will invest in RMB-denominated debt and equity securities in China primarily through a RQFII which is subject to applicable regulations imposed by the PRC authorities. Although repatriations by RQFIIs in respect of the Sub-Fund are currently not subject to repatriation restrictions, lock-up periods or prior approval, there is no assurance that PRC rules and regulations will not change or that repatriation restrictions will not be imposed in the future. Any restrictions on repatriation of the invested capital and net profits may impact on the Sub-Fund’s ability to meet redemption requests from the unitholders.
• Investment in securities through a RQFII will be subject to custodial risk of the RQFII Custodian appointed for purpose of safekeeping assets in the PRC. In addition, the execution and settlement of transactions or the transfer of any funds or securities may be conducted by brokers in the PRC. If the RQFII Custodian or the PRC brokers default, the Sub-Fund may not be able to recover all of its assets and may incur a substantial or even a total loss.
• The RQFII rules have only been recently announced and are novel in nature – their application may depend on the interpretation of the Chinese authorities. Any changes to the relevant rules may have an adverse impact on investors’ investment in the Sub-Fund.
• The Sub-Fund may not have exclusive use of the entire RQFII quota granted by SAFE to the RQFII (i.e. the Manager), as the RQFII may in its discretion allocate RQFII quota which may otherwise be available to the Sub-Fund to other products. There can be no assurance that the RQFII can allocate sufficient RQFII quota to the Sub-Fund to meet all applications for subscription of Units in the Sub-Fund.
Risks Relating to RMB Currency:
•RMB is currently not freely convertible and is subject to exchange controls by the Chinese government and investors may be adversely affected by movements of the exchange rates between RMB and other currencies.
•There is no guarantee that RMB will not depreciate. If investors convert Hong Kong Dollar or any other currency into RMB so as to invest in the Sub-Fund and subsequently convert the RMB redemption proceeds back into Hong Kong Dollar or any other currency, they may suffer a loss if RMB depreciates against Hong Kong Dollar or such other currency.
Risks Relating to Debt Securities:
•Credit risk - The Sub-Fund is exposed to the credit/insolvency risk of issuers of the RMB denominated debt securities it invests in. Such securities are typically unsecured debt obligations and are not supported by collateral. The Sub-Fund is therefore fully exposed to the credit/insolvency risk of its counterparties as an unsecured creditor. In the event of bankruptcy or insolvency of any of the Sub-Fund's counterparties, the Sub-Fund may experience delays in liquidating its positions and may, thereby, incur significant losses (including declines in the value of its investment) or the inability to redeem any gains on investment during the period in which the Sub-Fund seeks to enforce its rights, and fees and expenses incurred in enforcing its rights. These may result in a significant loss to the Sub-Fund.
•Risk relating to credit rating – The rating criteria and methodology used by Chinese local rating agencies may be different from those adopted by most of the established international credit rating agencies. Therefore, such rating system may not provide an equivalent standard for comparison with securities rated by international credit rating agencies and making investment based on the credit rating rated by Chinese local credit rating agencies may result in a loss to the Sub-Fund.
•Risks relating to below investment grade or unrated bonds and/or debt instruments - Some of the RMB denominated bonds and/or debt instruments may be rated below investment grade or unrated. Below investment grade or unrated bonds and/or debt instruments (with exception to central bank notes/bills, government bonds, treasury bonds and policy bank bonds) would generally be considered to have a higher credit risk and a greater possibility of default than more highly rated securities. As a result, such investments assume greater risks because of generally reduced liquidity and greater fluctuation in value. Valuation of the aforesaid bonds and/or debt instruments is more difficult. These may negatively impact the net asset value of the Sub-Fund.
•Interest rate risk - Investing in RMB denominated debt securities will subject the Sub-Fund to interest rate risk. Generally, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise. The Chinese government’s macro-economic policies and controls will have significant influence over the capital markets in China. Changes in fiscal policies, such as interest rates policies, may have an adverse impact on the pricing of debt securities, and thus the return of the Sub-Fund.
•Downgrading risk - Investment grade securities (which for the purpose of this Sub-Fund, means securities which are rated BBB- or above by PRC credit rating agencies) may be subject to the risk of being downgraded to below investment grade securities. If the Sub-Fund continues to hold such securities, it will be subject to additional risk of loss. The Manager may or may not be able to dispose of the debt instruments that are being downgraded.
•Valuation risk - Valuation of a 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, the net asset value of the Sub-Fund may be adversely affected. The value of debt securities may be affected by changing market conditions or other significant market events affecting valuation. For example, in the event of downgrading of an issuer, the value of the relevant debt securities may decline rapidly.
•Liquidity risk - The RMB denominated debt securities market is at a developing stage and the trading volume may be lower than those of the more developed markets. The Sub-Fund may invest in debt securities which are not listed. Even if the debt securities are listed, the market for such securities may be inactive. The Sub-Fund is therefore subject to liquidity risks and may suffer losses in trading such instruments. The bid and offer spreads of the price of such securities may be large, so the Sub-Fund may incur significant trading and realisation costs and may suffer losses accordingly.
•Past performance information (if there is any) is not indicative of future performance. The prediction mentioned in the recording, if any, is only for illustration and should not be regarded as investment recommendations. The opinions, estimations, predictions and statements about financial market trend in videos are our judgments based on current market which can be changed without notification. The information provided here cannot be assumed to be complete and accurate. The information sources in this video including third party information considered as reliable but viewers should verify relevant information on their own. This document is for information purpose only and does not constitute an offer or invitation or inducement in any form to enter into any securities or investment transactions, nor does it constitute any investment advice and hence must not be construed as such. It does not express any view as to the suitability of any investments described therein for any individual investor. Specific securities, asset class and financial market mentioned, if any, is only for illustration and should not be treated as investment recommendations and investment products, accounting, law, tax or other professional recommendations. CIFM Asset Management (Hong Kong) Limited (“CIFMHK”) is not liable to anyone on the issue aroused from information provided. The viewpoints mentioned in the video are not necessarily implying opinions of CIFMHK and related companies.
Information receivers should not resend or distribute information. Investment involves risks. The value and return of investment can increase or decrease. Investors are not guaranteed to get back the full or partial principle of investment. Information receivers should evaluate by themselves or seek for expert opinions before making any investment decisions. Information receivers are fully responsible to verify whether the information is qualified and complying relevant law and regulation standard.
•Investment involves risks. Investors should not make investment decisions based on this document alone. Before making any investment decision, investors should carefully read the “explanatory memorandum” and the “product key facts statement” of the Fund (collectively named as “Offering Documents”) for further details, including the risk factors. Information sources in this document are considered reliable but you should conduct your own verification of information contained herein. Past performance information (if there is any) is not indicative of future performance. The Fund does not have any guarantees. You may not get back the full amount of money you invest.
•This webcast is for information purpose only and does not constitute an offer or invitation or inducement in any form to enter into any securities or investment transactions, nor does it constitute any investment advice and hence must not be construed as such. It does not express any view as to the suitability of any investments described therein for any individual investor. Before acting on the content in this document, you should read the Offering Documents of the Fund and consider whether any such investment is suitable for your particular circumstances. If necessary, you should seek independent professional advice.
•The Fund has been authorized by the Securities and Futures Commission of Hong Kong (“SFC”). However, SFC authorization is not a recommendation or endorsement of the Fund nor does it guarantee the commercial merits of the Fund or its performance. It does not mean the Fund is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
This webcast has been prepared and issued by CIFM Asset Management (Hong Kong) Limited but has not been reviewed by the SFC.