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Hong Kong Authorized Unit Trusts

Ping An of China SIF - RMB Bond Fund

Risk Disclosure

Investment Risk:

Ping An of China SIF – RMB Bond Fund (the “Fund”) principally invest in RMB denominated Income Instruments (as defined below) which may fall in value and therefore your investment in the Fund may suffer loss.
The price of the Fund can be volatile and can go down substantially within a short period of time. In the worst case scenario, the value of the Fund may be worth substantially less than the original amount you have invested and in an extreme case could be worth nothing.
The Fund is an investment product and is NOT equivalent to bank deposits, therefore there is no guarantee in respect of repayment of principal. There is no guaranteed dividend payment.
The investment decision is yours. You should not invest in the Fund unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives. Investors should not only base their decision on this material alone. The investor should refer to the Fund’s explanatory memorandum (including the risk factors and charges stated therein) to get further details.


RMB Currency Risk:

RMB is not a freely convertible currency and is subject to foreign exchange control policies and restrictions on the repatriation of funds out of mainland China. There is no guarantee that RMB will not depreciate. Any depreciation of RMB could adversely affect the value of investor’s investment in the Sub-Fund. Although offshore RMB (CNH) and onshore RMB (CNY) are the same currency, they trade at different rates. Any divergence between CNH and CNY may adversely impact 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.
 

Risks associated with debt securities:
- Credit risk of counterparties and risks relating to debt instruments that are rated below investment grade or unrated: The Fund is exposed to the credit and default risk of the issuers of the debt securities that the Fund may invest in. The 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 risk: An investment in the Fund is subject to interest rate risk. In general, the prices of debt securities rise when interest rates fall, whilst their prices fall when interest rates rise.
- Volatility and liquidity risk: The debt securities in the market in mainland China 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 Fund may incur significant trading costs.
- Risk associated with investments in debt instruments with loss-absorption features: Debt instruments with loss-absorption features are subject to greater risks when compared to traditional debt instruments as such instruments are typically subject to the risk of being written down or converted to ordinary shares upon the occurrence of certain pre-defined trigger events (e.g. when the issuer is near or at the point of non-viability or when the issuer’s capital
ratio falls to a specified level), which are likely to be outside of the issuer’s control. Such trigger events are complex and difficult to predict and may result in a significant or total reduction in the value of such instruments. In the event of the activation of a trigger, there may be potential price contagion and volatility to the entire asset class. Debt instruments with loss-absorption features may also be exposed to liquidity, valuation and sector concentration risk.
- Investment in the Fund is also subject to downgrading risk, sovereign debt risk, risks associated with collateralised and/or securitised products, valuation risk, credit rating risk, credit rating agency risk, convertible bonds risk, risks relating to urban investment bonds, dim sum bond market and risks associated with Bond Connect. Please refer to the Fund’s offering documents for details.


Concentration risk:

The Fund’s investments are concentrated in RMB Income Instruments (as defined below) and in China. The value of the Fund may be more volatile than that of a fund having a more diverse portfolio of investments. The value of the Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Chinese markets.


Emerging market risk:

The Fund invests in emerging markets which may involve increased risks and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks or control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility.


Risks associated with investments in financial derivative instruments (“FDI”):

Risks associated with FDI include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element and component of an FDI can result in a loss significantly greater than
the amount invested in the FDI by the Fund. Exposure to FDI may lead to a high risk of significant loss by the Fund.
Risks associated with distributions out of capital: Payment of dividends 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 NAV per unit.

 

For the definition of RMB Income Instruments, please refer to the Explanatory Memorandum of the Fund.

Fund Information

Fund Manager Ping An of China Asset Management (Hong Kong) Co. Ltd.
Inception date 28-Apr-11
Fund size RMB 151.05 million (29-05-2020)
Base currency RMB
Unit priceRMB 104.77 per unit
 HKD 0.00 per unit
 USD 8.98 per unit
Dealing frequency Daily (1)
Dividend policy Semi-annual basis (2)

Fund Objective

Ping An of China SIF-RMB Bond Fund (the "Fund") seeks to provide total return comprised of interest income and capital growth by investing principally in RMB denominated fixed or floating rate debt securities.

Fund Strategy

The Manager seeks to achieve investment returns through active management of the major risks associated with RMB Income Instruments: duration, term structure, sector allocation, product selection and credit rating where applicable.

The Manager will construct the portfolio to take advantage of the expected change in the general level of RMB interest rates based on expectations of global and China's macroeconomic cycle, fiscal policy and monetary policy. The portfolio will consist of RMB Income Instruments of different maturities and credit quality and bank deposits, and each instrument in the portfolio will be selected based on extensive in-house and external fundamental research.

The Fund will not invest in any derivatives or structured deposits or products.

The Manager currently does not intend to enter into any securities lending or repurchase transactions in respect of the Fund.


General Information

Minimum investment amount RMB10,000 (initial), RMB10,000 (additional)
Minimum holding Units of aggregate minimum value of RMB10,000
Minimum redemption mount Units of aggregate minimum value of RMB10,000
Subscription fee Up to 5%
Switching fee 1% (Switching of Units is subject to the limitations as set out in the Explanatory Memorandum and that no switching is allowed to be made between Units denominated in RMB of the Sub-Fund and Units denominated in another currency of the Sub-Fund or other Sub-Funds (if any).)
Management fee 1% p.a.
Financial year end 30 June
Trustee BOCI-Prudential Trustee Limited

Codes

ISIN Code (RMB Class) HK0000079084; (HKD Class) HK0000096476; (USD Class) HK0000096484
Bloomberg Code (RMB Class) PARRMBA HK; (HKD Class) PARAHKD HK ; (USD Class) PARAUSD HK
Reuters Code (RMB Class) LP68090801; (HKD Class) LP68180641; (USD Class) LP68180642
Lipper ID (RMB Class) 68090801; (HKD Class) 68180641; (USD Class) 68180642

Dividend Record

Fund Inception Date: 2011-04-28

Record DateEx-DatePayment DateDividend Distribution (per unit)
RMBHKDUSD
2020-06-242020-06-262020-07-031.18N/A0.1
2019-12-272019-12-302020-01-091.6N/A0.14
2019-06-242019-06-252019-07-053.24N/A0.23
2018-12-282018-12-312019-01-211N/A0.09
2018-06-082018-06-112018-07-061.60N/A0.15
2017-12-142017-12-152018-01-122.40N/A0.22
2017-06-092017-06-122017-07-051.70N/A0.15
2016-12-152016-12-162017-01-132.40N/A0.21
2016-06-102016-06-132016-07-071.601.480.15
2015-12-162015-12-172016-01-132.302.140.21
2015-06-122015-06-152015-07-091.551.520.15
2014-12-112014-12-122015-01-072.302.260.22
2014-06-132014-06-162014-07-102.202.150.21
2013-12-122013-12-132014-01-081.801.810.18
2013-06-132013-06-142013-07-102.453.100.40
2012-12-132012-12-142013-01-091.10N/AN/A
2012-06-142012-06-152012-07-101.80N/AN/A
2011-12-142011-12-152012-01-091.00N/AN/A

Distribution figures represent past distributions declared and paid for by the fund. There is no guarantee that any distributions will be declared in the future, or that if declared, the amount of any distribution will remain constant or increase over time.

       

 - Dividend (ex-date)


RMB share class: Calendar Year Performance (%)

20102011*20122013201420152016201720182019 Since Fund Launch
N/A-3.84%7.45%4.93%2.83%4.56%6.98%5.86%3.57%5.03% 45.1%

* Since fund inception on 28 April 2011 to 31 December 2019.

HKD share class: Calendar Year Performance (%)

2010201120122013*201420152016** Since Fund Launch
N/AN/AN/A5.32%0.03%-0.97%5.17% 9.7%

* Since 1 Mar 2013 to 31 December 2016.
** Performance data of Share Class A HKD is as of 28 September 2016, as Share Class A HKD was fully redeemed on 28 September 2016.

USD share class: Calendar Year Performance (%)

2010201120122013201420152016201720182019 Since Fund Launch
N/AN/AN/A5.25%0.10%-1.01%0.94%13.24%-1.96%3.84% 20.7%

* Since 1 Mar 2013 to 31 December 2019.

Note:

  • Past performance information is not indicative of future performance. Investors may not get back the full amount invested
  • The computation basis of the performance is based on the calendar year end, NAV-To-NAV, with dividend reinvested
  • These figures show by how much the Sub-Fund increased or decreased in value during the calendar year being shown. Performance data has been calculated in RMB including ongoing charges and excluding subscription fee and redemption fee you might have to pay
  • Where no past performance is shown there was insufficient data available in that year to provide performance

RMB share class: Cumulative Performance (%)

1 month 3 months 6 months YTD 1 year 3 years 5 years
0.1% 0.5% 0.9% 1% 2.3% 12% 26.4%

Total return performance is based on NAV-to-NAV with dividend invested (if any), in RMB.

HKD share class: Cumulative Performance (%)

1 month 3 months 6 months YTD 1 year 3 years 5 years
N/A N/A N/A N/A N/A N/A N/A

Total return performance is based on NAV-to-NAV with dividend invested (if any), in HKD.

USD share class: Cumulative Performance (%)

1 month 3 months 6 months YTD 1 year 3 years 5 years
0.9% 1% -0.5% -0.5% -0.5% 7.9% 11%

Total return performance is based on NAV-to-NAV with dividend invested (if any), in USD.

Note:
The performance quoted represents past performance of the Fund. Investment return and principal value of an investment will fluctuate so that an investor's units, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Past performance may not be repeated and is no guide for future returns.

Date

NAV/Unit (RMB)

Dividend payout (ex-date)

2020-07-02104.770.00
2020-06-30104.740.00
2020-06-29104.760.00
2020-06-26104.801.18
2020-06-24105.920.00
2020-06-23105.880.00
2020-06-22105.960.00
2020-06-19106.020.00
2020-06-18106.060.00
2020-06-17106.120.00

Fund Manager Commentary

May Review

In May, both domestic and global economic fundamentals have begun to recover, market liquidity however has tightened marginally. On the policy front, PBOC has turned more prudent on inter-bank liquidity, providing targeted easing to support business activities while discourage various forms of financial leveraging.  Marginally tighter liquidity combined with improving economic fundamentals resulted in a risk asset rally and fixed income correction in May. Record primary supply of CNY1.3trn local govt bonds supply also added to the selloff pressure.
Both government and policy banks bonds sold off in May with yield curve shifted up by 20-50bps in bear flattening manner, erasing roughly half of the YTD gain. 10yrs CGB which once traded as low at 2.47% yield was back up at 2.7% as of end of the month. Credit papers also sell off in price term alongside with the general market weakness but with spreads passively compressed by the rising rates. IG Chinese credit bond yield rose 10-15bps while onshore HY credit yield rose by 20-30bps on average. On contrarily dim sum credit outperformed and delivered small gains in May due to scarcity of supply.  Sector-wise SOEs and LGFVs spreads tightened and outperformed, while HY names and private companies underperformed. Contracted sales figures demonstrated resilience in property sectors even during April hence property credit delivered stable return.
The onshore RMB bond market received US$16bn net inflows in May, the largest monthly inflow in a year, led by inflows into government and policy banks bonds. Specifically, foreign investors’ net positions increased by US$7.7bn and US$8.4bn respectively, while credit received smaller interests. Year to date foreign bond inflows have reached US$33bn. Our fund actively reduced duration risk by selling 10-30yrs rates paper at beginning of the month and added to shorter dated dim sum papers such as Fantasia and Beijing Infrastructure for its cheap valuation. HY credit exposures were added particularly to short tenor given better cash flow visibility. Our fund returned -0.12% in May vs average market return of circa -0.53%.

 

Outlook

With the boost of both monetary and fiscal policies announced during the NPC meeting, China’s economy will likely to carry forward the momentum of recovery coming out of the COVID situation in the next few months. From Jan – Apr RMB bond yield curve has come down by magnitude of 60-120bps, with May sell off erasing about half of that gain. Given the possible positive surprise in economic data in near term, and PBOC’s relatively cautious stance on liquidity at the moment, credit could see another smaller leg of price adjustment before market positions feel more balanced, but bond yield does not have the fundamental drivers to support a long-term upward trend.
Our medium term bullish view on RMB bond performance this year remains intact as fundamental trend and policies direction remains consistent i.e. subdue inflation, supportive for credit growth and lower borrowing cost. Market will soon be pricing in the next RRR cut to come in later part this year as inflation remains below target and declining growth trend. RMB bond as an asset class of its own delivers very decent relative value as compare to other global financial assets, taking into account the yield differential, potential room for additional easing, repriced USDCNY level, as well as market under-positioning.
The fund will continue to look for opportunistic credit to be added while tactically positioned in curve shape and rates duration. As a regular issuer of CNH papers, First Abu Dhabi Bank is one of the name which provides value via yield enhancement and lowering portfolio volatility given its higher credit quality of AA-. Within HY space we are looking to add more variety of names in onshore market e.g. Jinke Properties which is a rising star among the industry with national business model, improving leverage ratio and good liquidity coverage.

 

Note: CNH is the currency symbol for offshore RMB. Offshore RMB bonds are also known as dim sum bonds.
Information provided in this factsheet was as of 29 May 2020.

 


Top Ten Holdings

CHINA ORIENT ASSET MANAGEMENT CO LTD 4.33% A 23AUG2029 SHCH6.78%
GUANGZHOU METRO GROUP CO LTD 3.72% A 10JAN2025 CDC6.75%
SHIMAO PROPERTY HLDGS LTD 5.75% S/A 15MAR20216.73%
FAR EAST HORIZON LTD 4.9% S/A 27FEB20216.68%
FRANSHION BRILLIANT LTD 5.2% S/A 08MAR20216.05%
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VANKE REAL ESTATE HONG KONG CO LTD 3.85% S/A 13JUN20225.34%
LENOVO GROUP LTD 4.95% S/A 10JUN20205.30%
CNI CAPITAL LTD 3.97% S/A 01NOV20223.98%
CHARTER STYLE INTL LTD 5.8% S/A 15SEP20243.65%

As of 29 May 2020

Ping An of China SIF - RMB Bond Fund

1.Monthly Fund Factsheet (05-2020)DownloadFile Size: 197.9KB
2.Ping An of China SIF – RMB Bond Fund - Notice to UnitholdersDownloadFile Size: 221.6KB
3.Fund Dividend Composition InformationDownloadFile Size: 541.15KB
4.PRODUCT KEY FACTSDownloadFile Size: 670.69KB
5.EXPLANATORY MEMORANDUMDownloadFile Size: 1MB
6.Interim Report 1 July to 31 Dec 2019DownloadFile Size: 642.61KB
7.Ping An of China SIF - RMB Bond Fund - Notice (Nov 2019)DownloadFile Size: 326.33KB
8.Annual Report (06-2019)DownloadFile Size: 407.06KB
9.Announcement and AddendumDownloadFile Size: 301.71KB
10.Interim Report 1 July to 31 Dec 2018DownloadFile Size: 153.98KB
11.RMB Bond Fund – Notice – Change of Investment Objective and Policy and Other UpdatesDownloadFile Size: 249.11KB

(1) The Fund will have dealing on any Business Day.
(2) Currently June and December. Dividend distribution is subject to the manager's discretion, and there is no guarantee on any minimum dividend payment amount.

Ping An of China SIF – RMB Bond Fund (the “Fund”), a sub-fund of Ping An of China Select Investment Fund Series, has been authorized by the Securities and Futures Commission of Hong Kong (“SFC”) (SFC authorization is not an official 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). Certain information contained in this fact sheet is obtained and prepared from sources which Ping An of China Asset Management (Hong Kong) Co. Ltd (“PAAMC”) believes to be reliable. For information sourced externally (as disclosed), PAAMC believes that such information is accurate and complete. This fact sheet is for your information and reference only, and does not constitute an offer. Investment involves risks. Investors should not only base investment decisions on this material alone. The past performance is not indicative of future performance. The price of the Fund may rise or fall and investors may lose some or all of their investment. This material is issued by PAAMC and has not been reviewed by the SFC.