Details of the Fund
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.
|Manager:||Capital Dynamics Asset Management (HK) Private Limited|
|Trustee:||BOCI-Prudential Trustee Limited|
|Custodian:||Bank of China (Hong Kong) Limited|
|Ongoing charges over a year#+:||Class A:
Without performance fee: 2.79%
With performance fee: 2.79%
#The ongoing charges figure is the ongoing charges incurred by the Sub-Fund for the year ended 31 July 2019 based on the information in the latest annual report. It represents the sum of ongoing expenses chargeable expressed as a percentage of the average net asset value of the Unit class for the corresponding period. This figure may vary from year to year.
The ongoing charges figure takes into account the amount of reimbursements by the Manager to the Sub-Fund for the year ended 31 July 2019. Amortized portion of the set-up costs (based on amortization over first 5 accounting periods), the management fee and the trustee fee have been included in the ongoing charges figure.
+ The ongoing charges figure will be capped at 2.90% of the average net asset value of the Sub-Fund over a 12-month period. Any ongoing expenses in excess of 2.90% will be borne by the Manager. For the avoidance of doubt, any performance fee payable to the Manager is excluded from this cap. Where the performance fee is levied, the component in the ongoing charges figure which does not include performance fee will be capped at the percentage stated above.
If there is any change to the cap on ongoing charges, the Manager shall provide at least one month’s prior written notice to investors and obtain the SFC’s prior approval (where applicable).
|Dealing frequency:||Weekly (last Hong Kong Business Day of every week)|
|Dividend Policy:||Class A: No distribution, any income received will be accumulated and reflected in the Unit price.|
|Financial year end:||31 July|
|Fee||What you pay|
(% of switching out amount)
|5% for switching out of Units held for 1 year or less; Nil for switching out of Units held for more than 1 year
^For the avoidance of doubt, the switching fee will be charged for switching between classes of the Sub-Fund and switching between sub-funds of the i Capital Master Fund that are authorised by the SFC (if any).
(% of redemption amount)
|5% for Units held for 1 year or less; Nil for Units held for more than 1 year|
|Ongoing Fees||Annual rate (as a % of the Sub-Fund’s Net Asset Value)|
|Management fee||1.5% (150 basis points)**|
|Trustee fee||Up to 0.15% (15 basis points)**, subject to a minimum monthly fee of USD5,000|
|Custodian fee||Up to 0.0275% (2.75 basis points)|
|Performance fee||10% (1000 basis points) of the outperformance of the Net Asset Value per Unit during a performance period over the High Water Mark.
Outperformance means the amount by which the increase in Net Asset Value per Unit during the relevant performance period exceeds the High Water Mark.
High Water Mark is the higher of (i) the initial subscription price and (ii) the Net Asset Value per Unit as at the end of the performance period in respect of which a performance fee was last paid. Where a performance fee is payable for a performance period, the Net Asset Value per Unit on the last Valuation Day of that performance period will be set as the High Water Mark for the next performance period.
Performance fee accrues on each Valuation Day if the Net Asset Value per value exceeds the High Water Mark. On each Valuation Day, the performance fee accrual made (if any) on the previous Valuation Day will be reversed and a new performance fee accrual will be calculated. If the Net Asset Value per Unit is lower than or equal to the High Water Mark, any performance fee accrual will be reversed and no performance fee will be accrued.
For details and illustrative examples of the performance fee calculation, please refer to “Performance Fee” in Appendix 1 of the Explanatory Memorandum.
|Other fees||You may have to pay other fees when dealing in the Units of the Sub-Fund.|
** The fees and charges may also be increased up to the maximum level as specified in the Explanatory Memorandum by giving at least one month’s prior notice to investors. Please refer to the Explanatory Memorandum for further details.