Risks
Market risk
This is a general risk which the Sub-Fund is exposed to. Any movement in price of the investments of the Sub-Fund will affect the Sub-Fund’s NAV. Consequently, any losses which may be caused due to the global economy and/or any political and economical circumstances of the countries in which the issuers of the debt securities are situated in will cause a loss to the Sub-Fund and may lead to the consequent reduction in NAV per Unit (which may impact, in particular, any Unit Holder who/which redeems its Units prior to the Maturity Date).
Credit Risk
The Sub-Fund may invest in debt securities which may expose the Sub-Fund to the risk that an issuer may default on the payment of principal and/or interest. In the event that any issuer of bonds or other debt securities experiences financial or economic difficulties, this may affect the value of the relevant securities and any amounts paid on such securities. This may in turn affect the NAV per Unit.
Interest rate risk includes, but is not limited to
(a) the risk that debt obligations will decline in value because of changes in interest rates. Generally, debt securities will decrease in value when interest rates rise and increase in value when interest rates decline. The value of a Sub-Fund’s investments may fluctuate with the level of prevailing interest rates from time to time;
(b) the risk that the cost of any borrowing by the Sub-Fund, on which interest is payable at a variable rate, will increase if the relevant rate of interest moves higher. Conversely, assets which earn interest at a variable rate will suffer a decline in income if the relevant rate of interest declines.
Credit Ratings
The Sub-Fund shall invest in debt securities which are rated Investment Grade at the point of investment. Management of the Sub-Fund’s investments thus involve substantial reliance on credit ratings. Credit ratings are assigned by rating agencies. The level of a credit rating is an indication of the probability that (in the opinion of the rating agency) payments will be made on the relevant bond(s) or other obligation(s) to which the credit rating relates. While credit ratings can be a useful tool for financial analysis, they are not a guarantee of quality or a guarantee of future performance in relation to the relevant obligations. Ratings assigned to securities by rating agencies may not fully reflect the true risks of an investment. Ratings may also be withdrawn or revised at any time.
Redemption prior to maturity
In the event that a Unit Holder redeems prior to the Maturity Date, there is a substantial risk that he/she/it will not receive the value of his/her/its initial investment and a return of 3% per annum, which would otherwise be guaranteed in accordance with the terms of this Offering Supplement. This could expose Unit Holders to losses or to lesser returns than would have been achieved had a Unit Holder held his/her/its investment until the Maturity Date. Unit Holders should refer to the sub-section entitled ‘Early Redemption; loss of benefits’ under the section “Purchase, Distributions & Redemptions” for further information.
In addition, Unit Holders submitting an early redemption request prior to Maturity Date may also incur a redemption fee. Unit Holders should refer to the sub-section entitled ‘Redemption Fee’ under the section “Fees” for further information.