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W.I.S.E. -- SSE 50 China Tracker(R) (Stock Code: 03024) Investment Strategy is Changed from Synthetic to Physical Replications

BOCI-Prudential Asset Management Limited
2015-05-12 21:17 2180

HONG KONG, May 12, 2015 /PRNewswire/ --

Important Information

  • The W.I.S.E. – SSE 50 China Tracker® (the "Fund") is an index-tracking fund which seeks to provide investment performance (before taxes) that tracks the performance of the SSE 50 Index, which is an index consisting of 50 constituent A shares listed on the Shanghai Stock Exchange (the "SSE").
  • In order to achieve the investment objective of the Fund, the Manager will adopt a representative sampling strategy for the Fund. The Fund, at present, invests directly in A Shares via the Shanghai-Hong Kong Stock Connect##.
  • The Fund is subject to risks associated with the China market and risks relating to RMB, it is also subject to the following additional risks associated with the Shanghai-Hong Kong Stock Connect, including: quota limitations, suspension risk, differences in trading day, operation risk, restrictions on selling imposed by front-end monitoring, recalling of eligible stocks, clearing and settlement risk, counterparty risk relating to brokers, risks relating to participation in corporate actions and shareholders' meetings, no protection by Investor Compensation Fund and regulatory risk.
  • Investment in emerging markets involves special risks and considerations, such as, potential price and market volatility and illiquidity. These factors may have an adverse impact on the performance of the Fund.
  • Investment in the Fund may be subject to risks associated with changes in the PRC tax laws and such changes may have retrospective effect and may adversely affect the Fund. In respect of the current PRC Capital Gain Tax (as defined in the Appendix IV of the Prospectus) provisioning approach of the Fund, please refer to the Appendix IV of the Prospectus. In case the applicable tax rate exceeds the Capital Gain Tax provision, the Fund may bear additional tax liabilities. Also, a QFII in relation to the underlying A Shares to which an AXP (previously acquired by the Fund when it was a synthetic ETF) was linked, and the Fund in investing in A Shares directly via the Shanghai-Hong Kong Stock Connect, would be subject to a Distribution Tax (as defined in the Appendix IV of the Prospectus) of 10% on all cash dividends payment or cash proceeds which were referable to dividends or distributions arising from the A Shares. The Fund is the ultimate party that bears the Distribution Tax.
  • The Fund is also subject to concentration risk, passive management risk, tracking error risk, legal and regulatory risk, trading risk and termination risk, etc.
  • The Units in the Fund may trade at a discount or premium to the net asset value of the Units.
  • Investment involves risks and the Fund may not be suitable for everyone. Investors should carefully read the Prospectus of the Fund for further details including product features and risk factors, and should consider their own investment objectives and other circumstances before investing in the Fund.

BOCI-Prudential Asset Management i (the "Company") is pleased to announce that, starting today, the investment strategy of W.I.S.E. -- SSE 50 China Tracker® (the "Fund") is changed from synthetic replication (i.e. both indirect investment in A Shares through the A Share access products ("AXPs"), and direct investment in certain eligible A Shares via Shanghai-Hong Kong Stock Connect## (the "Stock Connect")) to physical replication (i.e. direct investment via Stock Connect) (the "Change") in order to achieve its investment objective. From now on, the Fund will, by adopting representative sampling strategy, wholly invest directly in A Shares via Stock Connect.

Dr. Hing Tang, the Managing Director and Head of Quantitative Strategy Business Unit of BOCI-Prudential Asset Management envisages that direct investment via Stock Connect will have fewer fee items such as AXP maintenance fees, collateral fees, etc., and considers that the Change is beneficial to the Fund.

Dr. Tang also said: "SSE 50 index futures were officially listed for trading on the China Financial Futures Exchange on 16 April 2015. This further expands the product line of the exchange, and provides more risk management tools to investors. The introduction of SSE 50 index futures helps promote a strong blue-chip trading liquidity, and it provides investors the opportunity to arbitrage among the cash, ETFs and futures market. Recently, the inflow of large amount of capital into the relatively undervalued big blue-chip sector has lead to a strong momentum of SSE 50 index futures, and upon the listing of SSE 50 index futures, more investors will benefit from the innovation and development of the capital market reform. In light of the above, the direct investment through Shanghai-Hong Kong Stock Connect by W.I.S.E.- SSE 50 China Tracker Fund® marks our capability to meet the market trend."

## The Shanghai-Hong Kong Stock Connect is a securities trading and clearing links program with an aim to achieve mutual stock market access between mainland China and Hong Kong. Through the Northbound Trading Link of the Shanghai-Hong Kong Stock Connect, investors, through their Hong Kong brokers and a securities trading service company to be established by the SEHK, will be able to place orders to trade eligible shares listed on Shanghai Stock Exchange ("SSE") by routing orders to SSE. The Fund will be allowed to trade SSE securities through Shanghai-Hong Kong Stock Connect (through the Northbound Trading Link). More details are set out in Appendix I to the Prospectus.

About BOCI-Prudential Asset Management

BOCI-Prudential Asset Management was jointly established by BOCI Asset Management Limited (which is a subsidiary company wholly owned by BOC International Holdings Limited) and Prudential Corporation Holdings Limited in 1999, offering a diverse spectrum of investment products, which includes Hong Kong mandatory provident fund scheme, pension funds, retail unit trusts, exchange traded funds, institutional mandates and other investment funds. The Company also manages discretionary investment portfolio and provides charity fund management services to both private individuals and institutional clients. In terms of asset under management on MPF, the Company is one of the top four MPF investment managers ii in Hong Kong. The managed Mandatory Provident Fund Scheme is one of the Master Trust Schemes engaged by the Government for the provision of MPF services to its eligible employees.

For details, please visit the official website at http://www.boci-pru.com.hk.

Media Enquiry

BOCI-Prudential Asset Management Limited
Market Communication
Ms Jazz Ho
Tel: +852-2280-8971
Email: jazz.ho@boci-pru.com.hk

i BOCI-Prudential Asset Management is the abbreviation of "BOCI-Prudential Asset Management Limited".

ii Source: Gadbury Group Limited. Gadbury Group MPF Market Shares Report (as at 31 December 2014).

 

The information contained herein is based on sources believed to be reliable and has not been independently verified.  BOCI-Prudential Asset Management Limited makes no representation, warranty or undertaking, whether express or implied, in relation to the information, opinions or projections in this press release or the basis upon which any such opinions or projections have been based, and will not be responsible for damages arising out of any person's reliance upon this document. Information, opinions and projections in this press release reflect a judgment at its original date of publication and are subject to change without notice.

 

This press release and the Manager's website have not been reviewed by the SFC.  Issuer: BOCI-Prudential Asset Management Limited.

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Source: BOCI-Prudential Asset Management Limited
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