Monthly Investment Outlook January 2016

Transcription

1 Monthly Investment Outlook January

2 Table of Contents Market Update P.3 Market Performance Review P.6 Portfolio s Performance Review P.9 Portfolio Holdings Performance P.11 Investment Perspective P.20 Portfolio Changes and Strategies P.25 2

3 Market Update (1) Just as the market had expected, the US Federal Reserve increased the interest rate by 25 basis points to 0.25% 0.5% for the first time in nearly 10 years. The median expected value of the federal funds rate by all 17 officials is 1.375% by the end of 2016, suggesting four more interest rate hikes next year. After the interest rate hike, Chile s and Mexico s central banks also lifted their corresponding interest rate. The European Central Bank announced a 10-basis-point reduction of its deposit rate to -0.3% while extending the asset purchase programme s duration to at least March 2017, unlimitedly reinvesting any QE programme s mature bond proceeds in new debts and broadening the scope of assets purchased to include local and regional debts. However, there is no increase on the monthly asset purchase amount. The Bank of Japan maintains its pace of asset purchase at 80 trillion yen per annum but is going to extend the average remaining maturity of its government bond purchases. The central bank will also initiate a new programme to purchase ETFs at an annual pace of 300 billion yen, which starts with purchasing ETFs that track the JPX-Nikkei Index 400 in order to stimulate corporate investment. Source: ifast compilations; data as at end-december

4 Market Update (2) The November Chinese economic data displayed mixed results. The Chinese official manufacturing Purchasing Managers Index fell to a three-year low at 49.6, making it the fourth consecutive month to stay in contraction. Exports missed market consensus and plunged 6.8% year-on-year. Industrial production and retail sales both rose above expectation to gain 6.2% and 11.2% respectively on a yearly basis. South Korean heavyweight Samsung Electronics led the drop as the corporation's affiliates violated the country s regulations regarding cross holdings. South Korean antitrust regulators requested that Samsung SDI sell part of its Samsung C&T holdings, contributing to a fall in the Samsun Electronics stock price In an Organisation of the Petroleum Exporting Countries meeting, Saudi Arabia declared that it will only cut its domestic oil production by 100 million barrels per day if all oil-producing countries agree to reduce their respective oil productions. Downward pressure on oil price increases as the meeting fails to reach an agreement. Together with surging political risk arising in South Africa as the country saw three different financial in a week, the EMEA market slumped in the month. Source: ifast compilations; data as at end-december

5 Market Update (3) Emerging-market bonds were subject to significant pressure in December. South Africa s rapid replacement of financial ministers severely damaged the region s bond and stock markets. Fitch slashed Brazil s sovereign credit rating to BB+ in mid- December while Moody s also put Brazil s credit rating into its list of observation. The country s central bank also implied a possible interest rate hike next year, inducing a wave of price adjustment in the bond market as a result. Global oil price sunk to the lowest level since the 2008 financial crisis. As a high-yield bond fund under Third Avenue blocked redemptions, US high-yield bonds especially those of the oil & natural gas and energy equipment sectors saw significant price adjustment. Despite the continuous price drop, oil is still some distance away from the historical low. High-yield bonds of oil-producing countries such as Venezuela, Ecuador and Russia did not see significant sell-offs. Source: ifast compilations; data as at end-december

6 Best-Performing Markets in December (in local currencies) Market Index 1 Month Ranking Year-to-date Ranking Chinese A shares CSI % 1 5.6% 3 Indonesia Jakarta Stock Exchange 3.3% % 15 Australia S&P/ASX % 3-2.1% 6 Malaysia KLCI 1.2% 4-3.9% 7 Singapore FTSE Straits Times 0.9% % 18 Taiwan Taiwan Stock Exchange 0.2% % 12 India BSE SENSEX -0.1% 7-5.0% 10 Hong Kong Hang Seng Index -0.4% 8-7.2% 11 Asia ex-japan MSCI AC Asia ex Japan -0.7% % 14 Chinese H shares Hang Seng Mainland % % 13 South Korea Korea Composite Stock Price -1.5% % 4 US S&P % % 5 World MSCI AC World -1.9% % 8 Emerging Markets MSCI Emerging Markets -2.5% % 19 Japan Nikkei % % 1 Brazil Ibovespa Brasil Sao Paulo Stock Exchange -3.9% % 16 Europe Stoxx % % 2 Thailand Stock Exchange of Thailand -5.3% % 17 Russia Russian Trading System Cash -10.6% % 9 Source: ifast compilations; data as at end-december

7 Best-Performing Markets in December (in HKD) Market Index 1 Month Ranking Year-to-date Ranking Australia S&P/ASX % % 12 Chinese A shares CSI % 2 1.0% 2 Indonesia Jakarta Stock Exchange 3.1% % 16 Singapore FTSE Straits Times 0.4% % 15 India BSE SENSEX 0.4% 5-9.4% 9 Malaysia KLCI 0.0% % 18 Hong Kong Hang Seng Index -0.4% 7-7.2% 8 Taiwan Taiwan Stock Exchange -0.6% % 13 Asia ex-japan MSCI AC Asia ex Japan -0.7% % 11 Chinese H shares Hang Seng Mainland % % 10 Japan Nikkei % % 1 US S&P % % 3 World MSCI AC World -2.0% % 5 Europe Stoxx % % 4 Emerging Markets MSCI Emerging Markets -2.5% % 14 South Korea Korea Composite Stock Price -3.2% % 7 Brazil Ibovespa Brasil Sao Paulo Stock Exchange -5.4% % 19 Thailand Stock Exchange of Thailand -5.9% % 17 Russia Russian Trading System Cash -10.7% % 6 Source: ifast compilations; data as at end-december

8 Best-Performing Bond Classes in December (in index currency) Bond Class 1 Month Year-to-date Developed countries sovereign bond 1.13% -1.60% Asian bond -0.31% 2.82% Emerging-market hard-currency bond -1.50% 1.23% Emerging-market local-currency bond -2.21% % Global high-yield bond -2.76% -3.49% Source: ifast compilations; data as at end-december

9 Portfolio Performance Since Inception (as at end-dec 15) Portfolio Portfolio Performance Index Performance Aggressive 1.87% -0.91% Moderately Aggressive 1.43% -0.78% Balanced 0.10% -0.65% Moderately Conservative -0.79% -0.52% Conservative -1.35% -0.39% See for detailed fund allocation. Source: Bloomberg and ifast compilations; 0.5% sales charge has been deducted from returns.. 9

10 Portfolio Performance in December Portfolio Portfolio Performance Index Performance Aggressive -1.49% -1.90% Moderately Aggressive -1.53% -1.37% Balanced -1.70% -0.83% Moderately Conservative -1.59% -0.29% Conservative -1.55% 0.25% See for detailed fund allocation. Source: Bloomberg and ifast compilations; 0.5% sales charge has been deducted from returns.. 10

11 Portfolio Holdings Performance Equity Funds Name ETF Return Since Inception (%) Return in December (%) Vanguard S&P 500 Index ETF Fund Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc Threadneedle IF ICVC European Select Fund (USD-Hedged) RNA Aberdeen Global Japanese Smaller Companies Fund (USD-Hedged) A2 Acc First State Asian Equity Plus Fund (USD) I Dis Mirae Asset Asia Great Consumer Equity Fund (USD) A Fidelity Funds Emerging Europe, Middle East And Africa Fund A-Acc-USD JPMorgan Latin America Equity A (Dist) USD First State China Growth Fund (USD) I Neuberger Berman China Equity Fund (USD) A Acc For past performance, see Source: Bloomberg and ifast compilations. Data as at 31 December

12 Fidelity Funds Emerging Europe, Middle East And Africa Fund A-Acc-USD Cumulative Return (%) Calendar-Year Return (%) Fund Name 1-month YTD Fidelity Funds Emerging Europe,Middle East And Africa Fund A-Acc-USD JPM Emerging Europe, Middle East And Africa Equity A (Dist) - USD The regional market s sell-off in the month was mainly due to worsening investment sentiment instead of fundamentals. South Africa s president Zuma replaced its minister of finance for the third time in five days, triggering a sell-off in the local stock market. OPEC s refusal to cut production pushed oil price down further; the Russian and Middle East markets suffered as a result. As South Africa s and Russia s stocks underwent price adjustment, Fidelity Funds Emerging Europe, Middle East And Africa Fund in our portfolio holdings lost. Fund manager Nick Price has been in charge of investment in emerging markets since He said he has already faced countless irrational, indiscriminate sell-off triggered by short-term market volatility in the past 10 years. For past performance, see Source: Bloomberg and ifast compilations. data as at 31 December

13 Fidelity Funds Emerging Europe,Middle East And Africa Fund A-Acc-USD The fund s main holdings include South African stocks, which make up 55% of the fund s asset (relative to the benchmark s 45%). The fund manger is pessimistic about South Africa s economic prospect, therefore most of its South African holdings are mainly those global and multi-national corporations like Naspers (pan-emerging market internet and media), Steingoff (European furniture retailer) and Discover (international life insurance technology). These companies domestic business contributed only a limited portion of their overall revenues. The fund is currently underweight in South Africa s banking sector. A vicious sell-off in the banks has had a material impact on valuations and this may well prove to be an excellent entry point. Source: Fidelity Investment Management (Hong Kong) Limited; data as at end-december

14 Fidelity Funds Emerging Europe,Middle East And Africa Fund A-Acc-USD Naspers is the fund s long-term holding. Its business model looks much like a private equity fund; its underlying business covers Africa, Asia, Latin America, Eastern Europe and Middle East. Naspers s PE and PB have both risen more than 500% on a cumulative basis since Naspers, the largest company in the MSCI South Africa Index and MSCI EM EMEA Index, has pushed up the market s overall valuation with its high valuation. Because of a strong forecast earnings growth, Naspers s estimated PE will drop significantly. Source: Fidelity Investment Management (Hong Kong) Limited and Datastream; data as at 16 December

15 Portfolio Holdings Performance Fixed Income Funds Name Fund BlackRock Global Funds - US Dollar Short Duration Bond Fund (USD) A3 Mdis Return Since Inception (%) Return in December (%) PIMCO Global Bond (USD) E Acc Templeton Global Total Return Fund (USD) A (Acc) Invesco Emerging Markets Bond Fund (USD) A Dist Neuberger Berman Emerging Market Debt - Local Currency Fund (USD) A Mdis First State Asian Quality Bond Fund (USD) I BlackRock Global Funds - Asian Tiger Bond Fund (USD) A3 Mdis BEA Union Investment Asian Bond And Currency Fund (USD) A Acc Fidelity Funds - Asian High Yield Fund A-Acc-USD BlackRock Global Funds - Global High Yield Bond Fund (USD) A Allianz US High Yield (USD) A MDis For past performance, see Source: Bloomberg and ifast compilations; data as at 31 December

16 US High-Yield Bonds Performance: Triple C-Rated Bonds Dropped More BofA Merrill Lynch US High Yield CCC or Below Total Return Index BofA Merrill Lynch US High Yield B Total Return Index BofA Merrill Lynch US High Yield BB Total Return Index Source: Bloomberg and ifast Compilations; data as end-december 16

17 Bps 1400 Spreads on HY Bonds from Energy, Industrial and Materials Sectors have Widened Significantly All Tech Health Care Energy Industrial Financials Sub Financials Snr Cons Disc Cons Staple Materials Communication Sources: Bloomberg and ifast compilations; data as at 31 December

18 Spreads on US High-Yield Bond have further Widened (%) 25 Yield Spreads on US High-Yield Bond bps vs 579bps LT average 453bps vs 384bps LT average BofA Merrill Lynch US High Yield Master II Option-Adjusted Spread BofA Merrill Lynch US High Yield BB Option-Adjusted Spread Sources: Merrill Lynch and ifast compilations; data as at 31 December

19 US High-Yield Bond s YTM is One of the Highest in Major High-Yield Bond Categories (%) BofA Merrill Lynch US High Yield BB Effective Yield BofA Merrill Lynch US High Yield CCC or Below Effective Yield BofA Merrill Lynch US High Yield Master II Effective Yield Sources: Merrill Lynch and ifast compilations; data as at 31 December

20 Investment Perspective : Underweighting EMEA EMEA stock markets, represented by the MSCI EM Emerging Europe, Middle East and Africa (EMEA) Index, has an expensive valuation. Although the market index dropped recently, its valuation has risen as the earnings fell faster than the corresponding stock price. South African stocks, which take up 45% of the MSCI EM EMEA Index s weighting, are expensive. Naspers, the largest company in the MSCI South Africa Index and the MSCI EM EMEA Index, has an estimated valuation of more than 50X. Most EMEA funds are still overweight in South African stocks, especially Naspers. Therefore, technically we cannot get rid of Naspers s effect on the market valuation and earnings growth. No matter how much we appreciate the fund managers, in the situation of worsening macro-economics, we turn defensive against the EMEA stock market s prospects and have decided to shift the corresponding allocation from neutral to underweight. 20

21 EMEA Markets PE is above Historical Mean; PE ex Russia and energy stocks would Hit Even Higher (X) 14 Forward PE - MSCI EMEA Index Index +1 SD Mean Market PE -1 SD Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 0 Sources: Bloomberg; data as at 31 December

22 Earnings on a Downtrend; Estimated Earnings have Recently been Adjusted Downward Significantly Earnings Trend MSCI EMEA Index MSCI EMEA (LHS) Earnings (RHS) Sources: Bloomberg; data as at 31 December

23 South African Market s Valuation Rose to Historical High (X) 20 Forward PE - South African Stock market SD Index Mean Market PE 10-1 SD Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 0 Sources: Bloomberg.; data as at 31 December

24 Earnings Trend is still Positive but the Stock Market is Rising Faster than its Earnings Growth Earnings Trend MSCI EMEA Index South African Stock Market Index (LHS) Earnings (RHS) Sources: Bloomberg; data as at 31 December

25 Portfolio Changes We saw no changes in December but the following changes will be made starting January 2016: Neutral asset class allocation In terms of asset allocation, we are neutral on Equities vs. Fixed-Income and removing our overweight in equities relative to bonds for the first time in eight years. We will change our asset allocation to neutral in early January 2016, which means we will reduce our equity holdings and increase our fixed income holdings. Underweight in EMEA stocks The South African market, which make more than 45% of the EMEA index, is still expensive. Naspers, the largest company within the MSCI South Africa Index and MSCI EM EMEA Index, still sees an estimated valuation of more than 50X. Although the market s earnings prospects remain positive, the current valuation has already fully factored in such positive factor. The low oil and commodity prices also contribute to the region s economic uncertainty, and we therefore will start underweighting EMEA equity funds in early January

26 Investment Prospects: Equity Strategy Markets Portfolio Allocation US Europe Japan Asia ex-japan EMEA Latin America China s H shares Underweight Underweight Overweight Overweight Neutral-> Underweight Neutral Overweight Source: ifast compilations. 26

27 Investment Prospects: Fixed Income Strategy Fixed Income Fund Portfolio Allocation Global bond/short-duration bond Underweight/ Underweight Asian investment-grade bond Overweight Asian high-yield bond Overweight Emerging-market bond Neutral Global/US high-yield bond Overweight Source: ifast compilations. 27

28 Risk Disclosure Statement Legg Mason ClearBridge US Aggressive Growth Fund (USD) A Acc RISK DISCLOSURE STATEMENTS INVESTMENT INVOLVES RISKS.The value of the Fund can be volatile and investors may not get back the amount originally invested. Past performance is not indicative of future results. Investors will be exposed to equity market, US markets, concentration, currency and debt securities risks. The Fund may use certain types of financial derivative instruments, which may involve a higher degree of risk including but not limited to counterparty, volatility, liquidity, leverage and valuation risks, and the Fund may suffer a substantial loss. Securities of smaller companies generally are less liquid and more volatile than those of larger companies; and smaller companies generally are more likely to be adversely affected by poor economic or market conditions. Investors should not invest based on this marketing material alone. Offering documents should be read for further details, including the risk factors. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a selfdirected online distributor and we only provide limited personal financial advisory services upon a particular request from client. Threadneedle IF ICVC - European Select Fund (USD-Hedged) RNA RISK DISCLOSURE STATEMENTS Threadneedle Investment Funds ICVC European Select (the Fund ) principally invests mainly in a relatively concentrated portfolio of equities of companies domiciled in Continental Europe or which have significant Continental European operations. The select investment approach means that the Authorised Company Director has the flexibility to take significant stock and sector positions which may lead to increased levels of volatility. The Fund may invest in one or a combination of the following instruments which may involve embedded leverage: fixed interest securities, other equities and money market securities. Investing in any one of the above instruments may involve substantial credit/counterparty, market, volatility and liquidity risk. If the issuers default or such instruments, or their underlying assets, cannot be realised or perform badly, investors entire investment may be lost. The Fund focuses on investing in a single geographical area is subject to higher risks of concentration than Funds following a more diversified policy. The Fund may have concentrated portfolios (holding a limited number of investments and/or large positions in a relatively small number of stocks). If one or more of those investments decline or are otherwise adversely affected, it may have a more pronounced effect on the Fund s value than if a larger number of investments were held or if the Fund had fewer large individual positions. Accordingly, the Fund may carry a higher degree of risk and NAV volatility than a fund which invests in a broad range of companies and or does not take large positions in a relatively small number of stocks. The investment decision is yours but you should not invest unless the intermediary which sells you the Fund has advised you that the Fund is suitable for you and has explained why, including how investment in the Fund will be consistent with your investment objectives. Investors should not base their investment decision on this document alone and must refer to the Prospectus of each Fund prior to investing. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a selfdirected online distributor and we only provide limited personal financial advisory services upon a particular request from client. 28

29 Risk Disclosure Statement Aberdeen Global - Japanese Smaller Companies Fund (USD-Hedged) A2 Acc RISK DISCLOSURE STATEMENTS The Fund invests in equities and equity-related securities of smaller companies in Japan. Smaller Companies are defined as companies with a market capitalisation of under Yen 250 billion at the date of initial investment and a maximum market capitalisation of Yen 500 billion at any time subsequent. The Fund s exposure to a single country market increases potential volatility. Investment in this fund may involve a high degree of risk and may not be suitable for all investors. It is possible that the entire value of the investment could be lost. Investors are responsible for their investment decisions and should ensure that the intermediary has advised on fund s suitability and consistency with their investment objective. If in doubt,please seek independent financial and professional advice. Investors should not invest in this Fund based solely on this document and should read the relevant offering documents (particularly the investment policies and risk factors) for more details before investing. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. First State Asian Equity Plus Fund (USD) I Dis RISK DISCLOSURE STATEMENTS Please refer to the Fund's offering document for the details of its ""Risk factors"", particularly the Emerging Markets Risks. The value of the Fund can be extremely volatile according to the change of market situation and could go down within a short period of time. It is possible that the entire value of your investment could be lost. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 29

30 Risk Disclosure Statement Mirae Asset Asia Great Consumer Equity Fund (USD) A RISK DISCLOSURE STATEMENTS The Sub-Fund invests in emerging markets that should be regarded as having higher political, regulatory, volatility, liquidity, economic and foreign currency risks than a fund which invests in developed markets. The Sub-Fund invests mainly in single geographical region (i.e. Asia ex Japan region) or specific sector should be regarded as having higher concentration risk and is more volatile than a fund following a more diversified policy. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Fidelity Funds - Emerging Europe, Middle East And Africa Fund A-Acc-USD RISK DISCLOSURE STATEMENTS The Fidelity Funds is an umbrella fund with sub-funds investing in equities, debt, money market securities and/or other instruments, including derivatives. These funds may be subject to the risks of investing in emerging markets which may be more volatile, and to concentration risks of investing in a single or in a limited number of market(s) or sector(s). These funds may invest in non-investment grade bonds which may be more volatile and subject to greater credit and liquidity risks. These funds may invest in derivative instruments and / or structured products which may involve additional risks. (For example, leverage may cause greater volatility.) Investors may suffer substantial loss of their investments in the funds. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 30

31 Risk Disclosure Statement JPMorgan Latin America Equity A (Dist) USD RISK DISCLOSURE STATEMENTS The Fund invests in emerging markets and thus has exposure to the relevant currency and settlement risk. The Fund s price movement may be subject to significant volatility and thus may go down or up sharply over a short time span. Investors may be subject to substantial losses. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. First State China Growth Fund (USD) I RISK DISCLOSURE STATEMENTS The Fund is a portfolio that invests in securities issued by companies with either assets in, or revenues derived from the People s Republic of China. Other than the Risk factors of the Fund s offering document - particularly the China Market Risk and Emerging Markets Risks, the Fund also involves Single Country Risk. The value of the Fund can be extremely volatile according to the change of market situation and could go down within a short period of time. It is possible that the entire value of your investment could be lost. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 31

32 Risk Disclosure Statement Neuberger Berman China Equity Fund (USD) A Acc RISK DISCLOSURE STATEMENTS The Fund will invest primarily in equity and equity-linked securities which are listed or traded on recognised markets and issued by companies that are incorporated or organized under the laws of, or that have a principal office in, the PRC, Hong Kong SAR, Macau SAR or Taiwan (the Greater China Region ), generally derive a majority of their total revenue or profits from (a) goods that are produced or sold, (b) investments made, or (c) services performed, in the Greater China Region, or generally hold a majority of their assets in the Greater China Region, (each a Greater China Company ). The Portfolio will invest primarily in mid and large capitalisation companies. The Fund is therefore exposed to investment, Equity Securities, Emerging Markets, Chinese Market, Lower Rated Securities, Currency and Currency Hedging Risk. The Fund may use financial derivative instruments (FDI) for efficient portfolio management and hedging purposes. FDIs, however, will not be extensively used for investment purposes (including efficient portfolio management) nor for hedging purposes. In respect of Distributing Shares, the Fund may at its discretion pay dividends out of the capital of the Fund. Dividends paid out of capital amount to a return or withdrawal of part of an investor s original investment or from any capital gains attributable to that original investment. Such dividends may result in an immediate decrease in the net asset value of the relevant shares. Investors may be subject to substantial losses. Investors should not solely rely on this document to make any investment decision. Please refer to the offering documents for details including the risk factors before making any investment decisions. Please seek independent financial and professional advice if necessary. Before you decide to invest, you should make sure the intermediary has explained to you that the fund is suitable for you. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 32

33 Risk Disclosure Statement BlackRock Global Funds - US Dollar Short Duration Bond Fund (USD) A3 Mdis RISK DISCLOSURE STATEMENTS The Fund invests in debt securities that are subject to both actual or perceived downgrading. The Fund may be affected by changes in prevailing interest rates and by credit quality considerations. The Fund's investments are concentrated in the US. This may result in greater volatility than more broad-based investments. The Fund may use derivatives to hedge market and currency risk and for efficient portfolio management. However, derivatives will not be extensively or primarily used for investment purposes. In an adverse situation, the Fund may suffer significant losses from their derivatives usage for hedging and efficient portfolio management. The value of a Fund can be volatile and could go down substantially within a short period of time. It is possible that the certain amount of your investment could be lost. Investors should not only base on this marketing material alone to make investment decision. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. PIMCO Global Bond (USD) E Acc RISK DISCLOSURE STATEMENTS The Fund may invest wholly through financial derivative instruments such as collateralised debt obligations, credit default swaps and asset-backed securities in order to meet its investment objective and such investment policies or portfolio management techniques may as a result lead to a higher volatility to the net asset value of the Fund. This investment may involve risks that could result in loss of part or entire amount of your investment. In making investment decisions, investors should not rely solely on this material. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 33

34 Risk Disclosure Statement Templeton Global Total Return Fund (USD) A (Acc) RISK DISCLOSURE STATEMENTS The Fund may invest in emerging market securities which are exposed to higher risk of economic, political and regulatory changes that may pose additional risk to the Fund. The Fund may invest up to 100% of their total net assets in structured products, mortgage- and asset-backed securities and derivatives (such as credit default swaps, forwards and options), and is subject to significant liquidity and counterparty default risks. The Fund may invest in defaulted debt securities on which the issuers are not currently making interest payment, and as a result may be subject to liquidity and counterparty default risks. The Fund may invest in non-investment grade debt securities, and as a result may be subject to liquidity and counterparty default risks. This investment involves risks which may result in loss of part or entire amount of your investment. The Fund s value may be affected by exchange control regulations and changes in exchange rates. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Invesco Emerging Markets Bond Fund (USD) A Dist RISK DISCLOSURE STATEMENTS The Fund is an investment fund investing in emerging markets bonds. Investors should note the interest rate risk, credit risk, counterparty risk and emerging markets associated with the investment. Financial derivatives instruments may be used for the purpose of meeting the investment objective of the fund; and such investment policies or portfolio management techniques may lead to a higher volatility to the net asset value of the fund and can involve additional risk, including but not limited to counterparty default risk or insolvency. The value of the product can be volatile and could go down substantially within a short period of time. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 34

35 Risk Disclosure Statement First State Asian Quality Bond Fund (USD) I RISK DISCLOSURE STATEMENTS The Fund invests in debt securities of issuers organised, headquartered or having their primary business operations in Asia. The Fund invests in emerging markets which may involve a greater risk than developed markets including sharp price movements, liquidity risk and currency risk. The Fund may invest in below investment grade and unrated debt securities. This exposes the Fund to greater liquidity risk, default risk and price changes due to change in the issuer's creditworthiness. The Fund invests in fixed income securities which may be impacted by movement in interest rates. It is possible that the entire value of your investment could be lost. For the monthly distributing Shares Class, any fees and expenses relating to this Share Class may be paid out of capital resulting in an increase in distributable income. At times the dividend may be paid out of capital. This amounts to a partial return of an investor's original investment, or from any capital gains attributable to that original investment, and may result in an immediate decrease of the Net Asset Value per share. You should not base your investment decision solely on this document. You should not invest unless the intermediary who sells it to you has advised you that the Fund is suitable for you and explained how it is consistent with your investment objectives. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. BlackRock Global Funds - Asian Tiger Bond Fund (USD) A3 Mdis RISK DISCLOSURE STATEMENTS The Fund invests in debt securities that are subject to risk of downgrading. The Fund is exposed to changes in prevailing interest rates and by credit quality considerations. The Fund may invest in higher yielding bonds which may have higher risk of loss. Investment in certain emerging markets may subject the Fund to additional risks arising from political, economic and market factors. The Fund also invests in bonds issued or guaranteed by governments or authorities which may involve political, economic, default, or other risks, and in turn have an adverse impact on the Fund. Certain shares of the Fund pay dividends gross of expenses or from capital at the Directors discretion. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital. Dividends paid from capital may amount to a partial return of an investor s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date. The Fund may use derivatives to hedge market and currency risk and for efficient portfolio management. However, derivatives will not be extensively or primarily used for investment purposes. In an adverse situation, the Fund may suffer significant losses from their derivatives usage for hedging and efficient portfolio management. The value of a fund can be volatile and could go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost. Investors should not base their investment decision on this marketing material alone. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 35

36 Risk Disclosure Statement BEA Union Investment Asian Bond And Currency Fund (USD) A Acc RISK DISCLOSURE STATEMENTS The Fund invests in emerging markets, which are subject to higher liquidity and volatility risks. The Fund may invest in lower-rated fixed income instruments, including below investment grade and non-rated debt securities, which are subject to greater credit and liquidity risks than higher-rated securities. The Fund may enter into futures contracts and currency forward contracts for hedging and investment purposes. For futures contracts and currency forward contracts entered into on an unhedged basis, the net total aggregate value of contract prices will not exceed 20% of the total net asset value of the Fund. Given the leverage effect embedded in futures and currency forward contracts, the Fund may be exposed to significant losses. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. BlackRock Global Funds - Global High Yield Bond Fund (USD) A2 RISK DISCLOSURE STATEMENTS The Fund invests in debt securities that are subject to both actual or perceived downgrading. The Fund may be affected by changes in prevailing interest rates and by credit quality considerations. The Fund may be subject to a higher risk of default when it invests in distressed securities. Certain shares of the Fund pay dividends gross of expenses or from capital at the Directors discretion. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital. Dividends paid from capital may amount to a partial return of an investor s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date. The Fund may use derivatives to hedge market and currency risk and for efficient portfolio management. However, derivatives will not be extensively or primarily used for investment purposes. In an adverse situation, the Fund may suffer significant losses from their derivatives usage for hedging and efficient portfolio management. The value of a fund can be volatile and could go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost. Investors should not only base on this marketing material alone to make investment decision. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 36

37 Risk Disclosure Statement Allianz US High Yield (USD) A MDis RISK DISCLOSURE STATEMENTS The Fund is therefore exposed to significant risks which include investment/general market, creditworthiness and interest rate changes risks. The Fund may invest in high-yield, non-investment grade investments and unrated securities which may subject to higher risks, such as credit, default, interest rate changes, general market and liquidity risks and therefore may increase the risk of loss of original investment. The Fund may invest in financial derivative instruments ("FDI") for efficient portfolio management (including for hedging) which may expose to higher counterparty, liquidity and market risks. The Fund will not invest extensively in FDI for investment purpose. Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Fund s income and/or capital which represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment. This may result in an immediate decrease of the NAV and the capital of the Fund available for investment in the future and capital growth may be reduced. This investment may involve risks that could result in loss of part or entire amount of your investment. In making investment decisions, investors should not rely solely on this material. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. Fidelity Funds - Asian High Yield Fund A-Acc-USD RISK DISCLOSURE STATEMENTS The Fidelity Funds is an umbrella fund with sub-funds investing in equities, debt, money market securities and/or other instruments, including derivatives. These funds may be subject to the risks of investing in emerging markets which may be more volatile, and to concentration risks of investing in a single or in a limited number of market(s) or sector(s). These funds may invest in non-investment grade bonds which may be more volatile and subject to greater credit and liquidity risks. These funds may invest in derivative instruments and / or structured products which may involve additional risks. (For example, leverage may cause greater volatility.) Investors may suffer substantial loss of their investments in the funds. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 37

38 Risk Disclosure Statement Fidelity Funds - Emerging Europe, Middle East And Africa Fund A-Acc-USD RISK DISCLOSURE STATEMENTS The Fidelity Funds is an umbrella fund with sub-funds investing in equities, debt, money market securities and/or other instruments, including derivatives. These funds may be subject to the risks of investing in emerging markets which may be more volatile, and to concentration risks of investing in a single or in a limited number of market(s) or sector(s). These funds may invest in non-investment grade bonds which may be more volatile and subject to greater credit and liquidity risks. These funds may invest in derivative instruments and / or structured products which may involve additional risks. (For example, leverage may cause greater volatility.) Investors may suffer substantial loss of their investments in the funds. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. JPM Emerging Europe, Middle East And Africa Equity A (Dist) USD RISK DISCLOSURE STATEMENTS The Fund invests in emerging markets and thus has exposure to the relevant currency and settlement risk. The Fund s price movement may be subject to significant volatility and thus may go down or up sharply over a short time span. Investors may be subject to substantial losses. The regulatory requirements of SFC state that investors should not invest in the product unless the intermediary who sells it to you has advised you that the product is suitable for you and explained how it is consistent with your investment objectives. Note: Fundsupermart.com is a self-directed online distributor and we only provide limited personal financial advisory services upon a particular request from client. 38

39 Disclaimer Investment involves risk. The price of securities may go down as well as up, and under certain circumstances an investor may sustain a total or substantial loss of investment. Past performance is not necessarily indicative of the future or likely performance of the fund. Investors should read the relevant fund's prospectus for further details including the risk factors before making any investment decision. An Investor should make an appraisal of the risks involved in investing in these products and should consult his/her own independent and professional advises to ensure that any decision made is suitable with regards to his/her circumstances and financial position. The above materials are issued by ifast Platform Services (HK) Limited and have not been reviewed by the SFC. When the investment returns of a fund are denominated in a foreign currency other than the USD/HKD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Funds that are invested in emerging markets may involve a higher degree of risk, and may be more sensitive to price movements relative to the developed markets. 39