i Capital China Fund (the “Sub-Fund”) is a fund constituted in the form of a unit trust under i Capital Master Fund, an umbrella unit trust established under the laws of Hong Kong.
The Sub-Fund seeks to achieve long-term capital appreciation by primarily investing in equity securities issued by companies listed in Hong Kong, Shanghai and/or Shenzhen.
Investors should note that the Sub-Fund’s allocation between instruments in the mainland China and the Hong Kong markets may change significantly from time to time. This may result in the Sub-Fund’s investment portfolio becoming more concentrated on either the mainland China market or the Hong Kong market from time to time.
The Sub-Fund’s investment strategy is driven by the Manager’s long term value investing philosophy. The Manager adapts its value investing approach by considering political and economic factors, and aims at drawing on the intrinsic value of a company having regard to the principle of margin of safety (the difference between the intrinsic value of a stock and its market price) as its core investment philosophy. The Sub-Fund’s investment horizon will not be restricted by sector or market cap.
The Sub-Fund aims to invest predominantly in listed securities whilst maintaining a cash buffer on a temporary basis (pending suitable investment opportunities and also for defensive purposes). The actual asset allocation is driven by the Manager’s value investing philosophy which is based on two components: namely the valuation of a listed company AND its market price. When the Manager considers the market is undervalued and there are appropriate investment opportunities whereby listed companies are trading below their fair value, the Sub-Fund may invest as much as 98% of its Net Asset Value in listed equity securities. In times of extreme market conditions such as when there are speculative bubbles in the mainland China and/or Hong Kong markets where the Manager considers that securities are overvalued and/or the mainland China or the Hong Kong economy is overheating, the Sub-Fund’s assets may invest up to 100% in cash/cash equivalent products on a temporary basis (such as money market instruments) in order to mitigate risk and/or maintain liquidity of the Sub-Fund.
In seeking to achieve the long term capital appreciation investment objective of the Sub-Fund, the Manager may consider a broad variety of factors and circumstances in the selection of securities and construction of the Sub-Fund’s portfolio. Such factors may include, but are not limited to, a company’s profitability, debt, valuation, growth prospects, actual or future cash flows, volatility, availability and liquidity of securities, sector outlook or prospects, the overall economic, political, tax and regulatory environment affecting the relevant securities and markets in mainland China and/or Hong Kong.