The fund has two aims:
- To provide growing income over any three-year period
- To provide capital growth of 2-4% on average per year over any three-year period.
Investment policy and strategy
Core investment: The fund typically invests directly in a mix of income-generating assets within the following allocation ranges:
• 40-80% in fixed income securities (including bonds and asset-back securities)
• 10-50% in company shares
The fund may also invest in the above assets indirectly via derivatives or through other funds. The fund may invest in China A-Shares and in Chinese bonds denominated in Renminbi. A minimum of 70% of the fund is typically invested in assets denominated in euro or hedged back to the euro.
Other investment: The fund may invest up to 20% in convertibles and contingent convetible debt securities, other funds and cash or assets that can be turned into cash quickly.
Derivatives: The fund may invest via derivatives and use derivatives with the aim of reducing the risks and costs of managing the fund.
Strategy in brief: The fund is actively managed with a highly flexible investment approach. The investment manager has the freedom to allocate capital between different types of assets in response to changes in economic conditions and asset prices. The approach combines in-depth research to work out the 'fair' value of assets over the medium to long term, with analysis of the market's short-term reactions to events, to identify investment opportunities. The fund seeks to manage risk by investing globally across multiple asset classes, sectors, currencies and countries. Where the investment manager believes opportunities are limited to a few areas, the portfolio may be very concentrated in certain assets or markets. The investment manager will normally seek to hold at least 70% of the fund in euros.
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.
The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset's value vary in an unexpected way, the fund may lose as much as or more than the amount invested.
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.
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.
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.
Investing in bonds from China, denominated in Renminbi and traded on the China Interbank Bond Market, may be subject to greater clearing, settlement and counterparty risk. These factors could cause the fund to incur a loss.
The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency 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.