Schroders appoints Bocom Schroders as master agent in Mainland China

Schroders aims to bring its flagship regional income-oriented fund, Schroder Asian Asset Income Fund, as its first fund under Mutual Recognition of Funds

06/07/2015

Important Information

1. The fund invests primarily in Asian equities and fixed income securities which offer attractive yields and sustainable dividend payments. The fund will have limited Renminbi (RMB) denominated underlying investments.

2. In respect of the distribution units, the manager will declare and pay monthly distributions. However, the distribution rate is not guaranteed. Distribution yield is not indicative of the return of the fund. Distribution may be paid from capital of the fund. Investors should note that where the payment of distributions are paid out of capital, this represents and amounts to a return or withdrawal of part of the amount you originally invested or capital gains attributable to that and may result in an immediate decrease in the value of units.

3. Changes in market interest rates will affect the value of debt securities held by the fund. The fund invests in below investment grade and/or unrated debt securities may be subject to higher counterparty, credit and liquidity risk than higher rated securities.

4. The fund’s investment in emerging and less developed markets may be subject to significant risks such as political and economic risks, legal and regulatory risks, market and settlement risks, execution and counterparty risk, and currency risk.

5. The fund may invest into investments denominated in currencies other than the fund's base currency and subject to currency and exchange risk. If the investor’s based currency is a different currency than the share class’s currency being invested in, the investor needs to carry out conversion and would involve conversion costs. RMB is currently not freely convertible. There is no assurance that RMB will not be subject to devaluation.

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7. The fund may invest in financial derivative instruments (FDI) for hedging purposes. In adverse situations, the fund’s use of FDI may become ineffective in hedging and the fund may suffer significant losses. Risks associated with FDI include counterparty risk, credit risk and liquidity risk. Such exposure may lead to a high risk of capital loss.

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Schroder Investment Management (Hong Kong) Limited (“Schroders”) announced a strategic partnership with its Mainland China joint venture, Bank of Communications Schroder Fund Management Co., Ltd. (“Bocom Schroders”), to expand its footprint on the mainland mutual fund market through the Mutual Recognition of Funds (MRF) scheme. With this agreement, Bocom Schroders will serve as the master agent for Schroders funds on the mainland, and be responsible for fund registration, liaison with regulators, distribution via its established network, and provide support on fund marketing initiatives.

Lieven Debruyne, CEO, Hong Kong, Schroders, said: “Since the Bocom Schroders’ establishment in 2005, we have a very close working relationship, particularly on our investment capabilities and QDII business. We believe Bocom Schroders has comprehensive knowledge of the Schroders brand and our investment philosophy. Together with its strong distribution network, it could best represent and deliver our investment proposition to mainland investors.”

Ruan Hong, CEO, Bocom Schroders, commented: “Bocom Schroders is one of the pioneers of the asset management industry in Mainland China. We are pleased to be the master agent for Schroders funds under MRF, which will further enhance our product range, providing clients with additional access to global markets.”

The AUM of the Mainland China mutual fund market is RMB 5.24 trillion as of 31 March 2015, which as a proportion of the country’s GDP is about 20%.1 This indicates growth opportunity for the asset management industry, as China’s aging society could mean increase in demand for diverse investment solutions that can provide sustainable income and meet retirement needs.

Schroder Asian Asset Income Fund (“AAI”) that is domiciled in Hong Kong has been submitted for CSRC’s authorisation. AAI is an Asia-focused multi-asset product that has an AUM of HK$43.00 billion as of 29 May 2015.

Lieven Debruyne added: “Schroders has been present and investing in Asia for more than 40 years, and this experience enables us to bring the best investment ideas for Asia, such as the Schroder Asian Asset Income Fund, to mainland retail investors. The past track record of AAI should appeal to investors who seeking for stable, long-term investments, and its large AUM has the scale to span its investment reach, which further diversifies risks and sources of potential returns. AAI complements the range of domestic-themed investment products on the market, and we believe our fund will be the ideal platform for Chinese investors wanting to begin investing internationally.”

Lieven Debruyne concluded: “The MRF is a major breakthrough in the asset management industry which allows investors on both sides of the border to further capture long-term investment opportunities in and outside of China. We see the current regulations for the scheme as the first stage of an evolving process that will eventually allow greater flexibility and scalability for fund providers and distributors, and as a result create wider investment choices for investors.”

1 PwC Hong Kong, Mainland and Hong Kong Mutual Recognition of Funds (MRF) – A new era for asset management in China and Hong Kong, http://pwccn.com/webmedia/doc/635689436431726079_am_cnhk_mrf_jun2015.pdf (June 2015).

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Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Derivatives carry a high degree of risk. Exchange rate changes may cause the value of the overseas investments to rise or fall. If investment returns are not denominated in HKD/USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Please refer to the relevant offering document including the risk factors for further details.

This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.

Schroders appoints Bocom Schroders as master agent in Mainland China

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