Investment involves risk including loss of principal, and investments in Sub-Fund may not be suitable for everyone. Investors should read the Prospectus and the Product Key Facts Statement carefully for details including the product features and risk factors, and should consider their own investment objectives and other circumstances before investing in CICC CGB ETF. The information provided herein is general in nature. If you are in any doubt about the contents of this website, you should consult your stockbroker, banker, solicitor, accountant or other financial adviser for independent professional advice before making any investment in CICC CGB ETF.
CICC CGB ETF, being a sub-fund of the umbrella unit trust constituted by the Trust Deed and called CICC Fund Series, is an index tracking collective investment scheme whose investment objective is to provide investment results that, before fees and expenses, closely correspond to the performance of Bloomberg China Treasury 1-10 Years Index (the “Index”). There can be no assurance that CICC CGB ETF will achieve its investment objective.
You are also drawn to attention of the following points with respect to CICC CGB ETF:
Investors should carefully read the Prospectus and the Product Key Facts Statement for further details of all risk factors in particular those associated with investments in CICC CGB ETF before making any investment decision. The Prospectus and the Product Key Facts Statement of CICC CGB ETF may be obtained from the office of China International Capital Corporation Hong Kong Asset Management Limited which is located 29th Floor, One International Centre, 1 Harbour View Street, Central, Hong Kong and can also be downloaded from Website. In addition to above points, investors are also drawn to the attention of specific risk factors with respect to the CICC CGB ETF set out in the Prospectus and the Product Key Facts Statement.
CICC CGB ETF has been authorized by the Securities and Futures Commission (the “SFC”) as a collective investment scheme. SFC authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance. It does not mean the product is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. Hong Kong Exchanges and Clearing Limited (“HKEX”), The Stock Exchange of Hong Kong Limited (the “SEHK”), Hong Kong Securities Clearing Company Limited (“HKSCC”) and the SFC take no responsibility for the contents of the Website, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of the Website.
Investment involves risks and it is possible that an investor may lose all of the principal amount invested. You should only invest in CICC CGB ETF if you can afford to lose all or part of your investment. CICC CGB ETF is subject to market fluctuations and to the risks inherent in all investments. The price of Units of CICC CGB ETF and the income generated (if any), may go down as well as up. Investment in emerging markets involves special risks and considerations, and investors should refer to the Prospectus for further details on such risks and considerations. Investors should ensure that they fully understand the nature of risks in connection with an investment in CICC CGB ETF before making any such investment, and investors should seek independent advice from their professional advisers as they deem necessary prior to making any investment in CICC CGB ETF. Investment in emerging markets involves special risks and considerations.
Past performance information presented (if any) is not indicative of future performance.
All information displayed on this website is provided on an “as is” basis and China International Capital Corporation Hong Kong Asset Management Limited makes no representations and disclaims all warranties (whether express or implied) as to the accuracy or completeness of the information provided herein.
The contents of this website have not been reviewed by the SFC.
Manager: China International Capital Corporation Hong Kong Asset Management Limited
In addition to the risk factors presented in Part 1 of the Prospectus, the risk factors set forth below are also specific risks, in the opinion of the Manager, considered to be relevant and presently applicable to the Sub-Fund.
General investment risk
The Sub-Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.
Carbon emissions allowance market risks
Concentration / single commodity risk: The Sub-Fund’s investments are concentrated in current year December expiration EUA Contracts. This may generally result in higher concentration risk and price volatility of the Sub-Fund than a fund having a more diverse portfolio of investments or which holds future contracts with different expiring months. The value of the Sub-Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the EUA market.
Carbon emissions volatility risk: The Sub-Fund invests in EUA Contracts the value of which may be impacted by carbon emissions prices, which in turn may fluctuate widely and may be affected by factors including global and local supply and demand of carbon emissions allowances, the inclusion of new industries in the European Union Emissions Trading System (“EU ETS”), global or regional political, economic or financial events and situations, investors’ expectations with respect to future rates of economic activity and inflation, and investment and trading activities of various investors. The NAV of the Sub-Fund may consequentially be affected by the foregoing.
Energy sector risk: The energy sector is a major emitter of greenhouse gases and its activities may thus significantly impact the supply and demand of emissions allowances. For instance, further advances in renewable energy technology, improved efficiency of energy usage and/or unusually warm weather patterns may result in an increase in supply and/or decrease in demand for such allowances which in turn may have a negative impact on the NAV of the Sub-Fund.
“Cap and trade” principle risk: The EU ETS works on the “cap and trade” principle, whereby a cap is set on the total amount of certain greenhouse gases that can be emitted by the installations (or companies) covered by the system, and companies trade emissions allowances within such cap which is reduced over time. Whilst the cap is reduced over time, should the rate or level of reduction in such cap be lower than market expectations, the prices of emissions allowances, and thus the Index level and the NAV of the Sub-Fund, may be negatively affected. In addition, compared to a carbon tax system, a “cap and trade” system may lead to greater volatility in carbon emissions prices, and there is no guarantee that there is adequate liquidity in the EUA Contract market for its participants, including the Sub-Fund, to efficiently trade EUA Contracts. These features of the “cap and trade” system may have an adverse impact on the NAV of the Sub-Fund.
Futures contracts risks
Contango and backwardation risk: The Index and thus the Sub-Fund’s rolling strategy involves the replacement of shorter-dated EUA Contracts with longer-dated EUA Contracts. The value of the Index (and so the NAV of the Sub-Fund) may be adversely affected by the cost of rolling positions forward where prices of the EUA Contracts with later expiration dates are higher than those with earlier expiration dates, i.e. a “contango” market, thereby creating a negative "roll yield”. By contrast, if the market for these contracts is in “backwardation”, where the prices of the EUA Contracts with later expiration dates are lower than the prices of EUA Contracts with earlier expiration dates, the sale of these EUA Contracts would take place at a price that is higher than the price of the EUA Contracts with later expiration dates, thereby creating a positive “roll yield”. Investors should note that save for the transaction cost incurred, “rolling” in itself is not a loss or return-generating event. The roll yield is typically realised over time.
Volatility risk: The price of EUA Contracts can be highly volatile and is influenced by, among others, trade, fiscal, monetary and exchange control programs and political changes.
Leverage risk: Because of the low margin deposits normally required in futures trading, an extremely high degree of leverage is typical of a futures trading account. A relatively small price movement in an EUA Contract may result in a proportionally high impact and substantial losses to the Sub-Fund, thereby having a material adverse effect on the NAV. A futures transaction may result in losses in excess of the amount invested.
Liquidity risk: The Index is calculated with reference to EUA Contracts exposing the Sub-Fund and the investor to a liquidity risk linked to EUA Contracts which may affect their value.
Mandatory measures imposed by relevant parties risk: Regarding the Sub-Fund’s futures positions, relevant parties (such as clearing brokers, execution brokers and ICE Endex) may impose certain mandatory measures under extreme market circumstances. These measures may include limiting the size and number of the Sub-Fund’s futures positions and/or mandatory liquidation of the Sub-Fund’s futures positions without advance notice to the Manager. In response to such mandatory measures, the Manager may have to take corresponding actions in the best interests of the Unitholders and in accordance with the Sub-Fund’s constitutive documents, including but not limited to implementing alternative investment and/or hedging strategies as provided for in the above section “Objective and investment strategy”. These corresponding actions may have an adverse impact on the Sub-Fund. While the Manager will endeavour to provide advance notice to investors regarding these actions, such advance notice may not be possible in some circumstances.
Margin risk: The Sub-Fund’s investment in EUA Contracts involve the posting of margin or collateral. Increases in the amount of collateral or margin or similar payments may result in the need for the Sub-Fund to liquidate its investments at unfavourable prices in order to meet collateral or margin calls. This may result in substantial losses to investors.
Risk of material non-correlation with spot/current market price of EUA
The Index measures the performance of EUA Contracts rather than EUA. The Sub-Fund invests in current year / next year December expiration EUA Contracts and the price of such an EUA Contract reflects the expected value of the EUA upon delivery in the future in current year / next year December, whereas the spot price of an EUA reflects the daily immediate delivery value of the EUA with daily expiry on ICE Endex. As such, the performance of the Index may substantially differ from the current market or spot price performance of EUA. Accordingly, the Sub-Fund may underperform a similar investment that is linked to the spot price of EUA.
Risk related to unscheduled roll of the Index
Notwithstanding the rolling strategy published by the Index Provider, under exceptional circumstances, the Index Provider may implement an unscheduled roll. In such event, the Sub-Fund will endeavour to carry out rolling of the Sub-Fund accordingly with an aim to closely track the Index. However there is no guarantee that the Sub-Fund will succeed in in this regard. In addition, it is specified in the section “Objective and investment strategy” above that, under exceptional market conditions, the Manager may in its discretion deviate from the rolling strategy and/or rolling schedule stated in the Index methodology in the best interests of the Sub-Fund and the Unitholders and for the protection of the Sub-Fund. There is a risk that the tracking error and tracking difference of the Sub-Fund may increase.
Risks of investing in money market funds
The Sub-Fund may invest in money market funds, but may not have control of the investments of these underlying funds and there is no assurance that the investment objective and strategy of these underlying funds will be successfully achieved which may have a negative impact on the NAV of the Sub-Fund.
There may be additional costs involved when investing into these underlying funds. There is also no guarantee that the underlying funds will always have sufficient liquidity to meet the Sub-Fund’s redemption requests as and when made.
Investors should also note that the Sub-Fund’s investment in a money market fund is not the same as the Sub-Fund placing funds on deposit with a bank or a deposit-taking company. A money market fund does not guarantee principal, and units or shares in such money market fund may not be redeemed by the Sub-Fund at its offer value.
Passive investments risk
The Sub-Fund is passively managed and the Manager will not have the discretion to adapt to market changes due to the inherent investment nature of the Sub-Fund. Falls in the Index are expected to result in corresponding falls in the value of the Sub-Fund. Under exceptional market conditions, the Manager may adopt a temporary defensive position for protection of the Sub-Fund in the best interests of the Sub-Fund and the Unitholders.
New product risk
The Sub-Fund is a futures-based ETF investing directly in EUA Contracts. The novelty of such an ETF and the fact that the Sub-Fund is one of the first few futures-based ETFs in Hong Kong makes the Sub-Fund potentially riskier than traditional ETFs investing in equity securities.
New Index risk
The Index is a new index. The Sub-Fund may be riskier than other ETFs tracking more established indices with longer operating history.
Government intervention and restrictions risk
Governments and regulators may intervene in the financial markets, such as by the imposition of trading restrictions. This may affect the operation and market making activities of the Sub-Fund, and may create negative market sentiment which may in turn affect the performance of the Index and the Sub-Fund.
Distributions out of or effectively out of capital risk
Payment of dividends out of capital or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any such distributions may result in an immediate reduction in the NAV per Unit of the Sub-Fund.
Other currency distribution risk
Investors should note that all Units will receive distribution in HKD only. In the event that the relevant Unitholder has no HKD account, the Unitholder may have to bear the fees and charges associated with the conversion of such distribution from HKD to another currency. The Unitholder may also have to bear bank or financial institution fees and charges associated with the handling of the distribution payment. Unitholders are advised to check with their brokers regarding arrangements for distributions.
Currency exchange risk
The Sub-Fund is denominated in HKD whilst EUA Contracts and the Index are both denominated in EUR. Other investments of the Sub-Fund may also be denominated in a currency other than HKD. The Sub-Fund may thus be subject to transaction costs in the exchange of such other currencies to HKD. The performance and the NAV of the Sub-Fund may therefore be affected unfavourably by movements in the exchange rate between HKD and such other currencies and changes in exchange rate control policies.
Tracking error risk
The Sub-Fund may be subject to tracking error risk, which is the risk that its performance may not track that of the Index exactly. This tracking error may result from the investment strategy used and/or fees and expenses, as well as factors such as the inability to rebalance the Sub-Fund’s holdings of EUA Contracts to track the Index, rounding of the EUA Contracts’ prices, and changes to the regulatory policies. The Manager will monitor and seek to manage such risk and minimise tracking error. There can be no assurance of exact or identical replication at any time of the performance of the Index.
The trading price of Units on the SEHK is driven by market factors such as the demand and supply of Units. Therefore, the Units may trade at a substantial premium or discount to the Sub-Fund’s NAV and may deviate significantly from the NAV per Unit.
As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Units on the SEHK, investors may pay more than the NAV per Unit when buying Units on the SEHK, and may receive less than the NAV per Unit when selling Units on the SEHK.
The Units in in the RMB counter are RMB denominated securities traded on the SEHK and settled in CCASS. Not all stockbrokers or custodians may be ready and able to carry out trading and settlement of the RMB traded Units. The limited availability of RMB outside China may also affect the liquidity and trading price of the RMB traded Units.
Trading differences risks
As the ICE Endex may be open when Units are not priced, the value of the EUA Contracts in the Sub-Fund’s portfolio may change on days when investors will not be able to purchase or sell the Sub-Fund’s units. Differences in trading hours between the ICE Endex and the SEHK may also increase the level of premium or discount of the Unit price to its NAV.
Reliance on market maker and liquidity risks
Although the Manager will ensure that at least one Market Maker will maintain a market for the Units in each counter, and that at least one Market Maker in each counter gives not less than 3 months’ notice prior to terminating market making arrangement under the relevant market maker agreement, liquidity in the market for Units may be adversely affected if there is no or only one Market Maker for the Units. There is also no guarantee that any market making activity will be effective.
There may be less interest by potential market makers making a market in Units traded in RMB. Furthermore, any disruption to the availability of RMB may adversely affect the capability of market makers in providing liquidity for the Units.
If there is a suspension of the inter-counter transfer of Units between the counters and/or any limitation on the level of services by brokers and CCASS participants, Unitholders will only be able to trade their Units in one counter only, which may inhibit or delay an investor dealing. The market price of Units traded in each counter may deviate significantly. As such, investors may pay more or receive less when buying or selling Units traded in one counter than the equivalent amount in the currency of another counter if the trade of the relevant Units took place on that other counter.
The Sub-Fund may be terminated early under certain circumstances, for example, where the Index is no longer available for benchmarking or if the size of the Sub-Fund falls below US$10,000,000 (or equivalent). Investors may not be able to recover their investments and suffer a loss when the Sub-Fund is terminated.
The investment objective of CICC Bloomberg China Treasury 1-10 Years ETF (“CICC CGB ETF” or the “Sub-Fund”) is to provide investment results that, before fees and expenses, closely correspond to the performance of Bloomberg China Treasury 1-10 Years Index (the “Index”). There can be no assurance that the Sub-Fund will achieve its investment objective.
For CICC CGB ETF, the near real time estimated Net Asset Value per Unit in HKD and RMB, and the latest closing Net Asset Value per Unit in HKD referred to above, are indicative and for reference only.
The near real time estimated Net Asset Value per Unit (HKD and RMB) is updated every 15 seconds during SEHK trading hours and is calculated by Solactive AG.The near real time estimated Net Asset Value per Unit in HKD is calculated using the near real time estimated Net Asset Value per Unit in RMB multiplied by a near real time RMB:HKD foreign exchange rate for offshore RMB (CNH), quoted by Solactive AG. Since the estimated Net Asset Value per Unit in RMB will not be updated when the underlying market is closed, the change in the estimated Net Asset Value per Unit in HKD during such period is solely due to the change in the near real time foreign exchange rate.
|Fund Listing Date||12 December 2018|
|Fund Financial Year End||31st December|
|Distribution Policy||Annual Distribution (Subject to the Manager's discretion)|
|Ongoing charges over a year||0.35%|
|Management Fees||Currently 0.20% per year of the Net Asset Value|
|Underlying Index||Bloomberg China Treasury 1-10 Years Index|
|Index Ticker||I33620CN Index|
|Index Provider||Bloomberg Index Services Limited|
|Type of Index||Total Return Index|
|Shares Outstanding (As of 2021-12-31)||750,000.00|
|Net Asset Value (As of 2021-12-31)||RMB 79,315,656.67|
|HKD Counter||RMB Counter|
|Exchange||SEHK – Main Board|
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