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United Renminbi Bond Fund Launch

United Renminbi bond fund will start trading from 3rd May 2011 and the initial offer period will be from 16th March 2011 to 29th April 2011.

While there are already a couple of Renminbi bond funds that cater to the accredited investors space, UOB Asset Management (UOBAM) is the first fund house in Singapore that will offer a Renminbi bond fund to retail investors.

The United Renminbi bond fund offers investors an opportunity to gain from a potential Renminbi appreciation while at the same time continue to enjoy the coupons from the underlying bonds.

The Fund will currently invest primarily in Renminbi denominated debt securities (“RMB Debt Instruments”) issued or distributed outside mainland China. The issuers of such securities include, but are not limited to, governments, quasi-government bodies, international and multinational organisations, banks and financial institutions, and corporations.

In addition, the Fund may also invest in onshore debt instruments via institutions that have obtained Qualified Foreign Institutional Investor status (“QFII”) in the People’s Republic of China (“PRC”), or by purchasing derivative products linked to such onshore debt instruments (“Access Products”), including, but not limited to, participating certificates and participatory notes offered or issued by institutions which have obtained QFII status.

In order to obtain a full exposure to the Renminbi currency, the Fund will not typically be hedged in terms of currency, unless the Fund Manager deems appropriate to protect the investment returns.

The Fund has the flexibility to invest in other debt instruments that are not denominated in RMB. It may also invest in other instruments such as credit-linked notes, currency forwards, non-deliverable forwards (NDFs), CNH forward contracts, interest rate swaps and cross-currency swaps.

The fund is available in both US$ and S$ and the minimum investment required to invest in the fund is S$5000 or US$5000. It is available in both cash and SRS.  The management fee of the fund is currently 1% p.a. and can go up to a maximum of 2%p.a.

The United Renminbi bond fund prospectus can be found here:

United Renminbi Bond Fund Prospectus

This product might be suitable for customers who:

  • Want exposure to the Renminbi
  • Are willing and able to tolerate investment and currency risks investing in a new but developing CNH bond market
  • Have a medium to long term investment horizon

This product is not suitable for customers who:

  • Have a short term investment horizon
  • Are not willing to tolerate the investment and currency risks investing in a new but developing CNH bond market; who cannot tolerate any potential loss in their capital.

UOB to launch Yuan bond fund, new Yuan deposits (Straits Times)

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1 comment
Nuts says 11 years ago

I think RMB products are over hyped for the past 1 year, mainly coming from ang mohs and those earning in USD or EUR or HKD. It may make sense for them since their currencies either have deep structural problems, or is a hard peg to USD.

If you’re earning SGD, and you had converted to RMB, you would have lost in exchange rate over 3 years, 2 years, 1 year, 6 months and 3 months period. If you believe in the China story, better to put into the aussie or the loonie, if you still want to diversify from SGD. Personally I think SGD will trump most world currencies over the next year or so.

As for this fund’s investment universe, seems to be a rojak collection of debt instruments, DERIVATIVES, and mostly non-investment grade. The risk appears to be as high as asian balanced fund, but without the equivalent potential return.

China will not allow the RMB to appreciate too much against other currencies — it still depends too much on cheap export industry to support 100s of millions of jobs. Maybe in 10 years time, China will allow the RMB to be truly free-floating and fully convertible on open world markets.

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