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)