The fund aims to provide an annual income of 4-6%. Provided this can be achieved, the fund also aims to grow capital over any five-year period. There is no guarantee that the fund will meet its investment objective and investors may not recoup the amount they originally invested.
Investment policy and strategy
Core investment: At least 80% of the fund will be invested in emerging market assets, including company shares, bonds and real estate investment trusts. The fund may invest across different countries, sectors and company sizes.
The fund invests in companies domiciled or conducting the majority of their business in emerging market countries. At least 25% of the fund will be invested in shares of such companies and at least 25% in their bonds at all times.
The fund manager has the discretion to identify the countries that qualify as emerging markets. Typically, these will be countries that the International Monetary Fund or World Bank defines as emerging or developing economies.
The fund typically invests directly. It may also invest indirectly through derivatives. In addition, derivatives are used to meet the fund’s investment objective and to reduce risk and costs.
Strategy in brief: The fund will employ a bottom-up approach to find the best investments across the capital structure to deliver on the fund’s stated income target while striving to generate long-term capital growth.
Corporate bonds typically generate and have historically generated a higher level of income yield than company shares. Consequently, income is not the fund manager’s only consideration when selecting shares. Instead, the fund will hold shares for their investment characteristics and their expected total return profile rather than purely their dividend yield. The fund’s allocation between bonds and shares is an output of the investment process and portfolio construction and, as such, will be the result of the fund manager investing in the best ideas, individually and relatively, across the capital spectrum.
Other investments: The fund may also invest in cash and deposits, other debt instruments and other funds.
Bonds: Loans to governments and companies that pay interest.
Derivatives: Financial contracts whose value is derived from other assets.
Risks associated with the fund
The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.
Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
The fund may invest in China A shares. Investments in assets from the People's Republic of China are subject to changeable political, regulatory and economic conditions, which may cause difficulties when selling or collecting income from these investments. In addition, such investment is made via the 'Stock Connects' systems, which may be more susceptible to clearing, settlement and counterparty risk. These factors could cause the fund to incur a loss.
The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.
In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.
The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.
Further details of the risks that apply to the fund can be found in the fund's Prospectus.
The Fund allows for the extensive use of derivatives.