The China Fund aims to provide capital growth.
The Fund invests at least 80% of its net assets, by taking long (and to a lesser extent short), positions in equities or equity-related instruments of:
• companies having their registered office in China and Hong Kong;
• companies that do not have their registered office in China and Hong Kong but do most of their business, either directly or through subsidiaries, in China and Hong Kong.
Equities may include China A-Shares, directly through the Stock Connect Programs and other eligible exchanges or indirectly through derivative instruments. Exposure to China A-Shares will not be more than 50% of the Fund’s net asset value. Equity-related instruments may include depository receipts, amongst others.
The Fund’s long positions may be held through a combination of direct investment and/or derivative instruments (such as futures, forwards, structured financial derivatives, equity swaps (also known as contracts-for-differences), swaps, options and warrants), whilst the short positions are achieved entirely through derivative instruments. The Fund will have significantly greater exposure to long positions than short positions and is therefore likely to demonstrate a high correlation to Chinese equity markets. The Fund may use derivative instruments as part of the investment strategy, hedging and for the purposes of efficient portfolio management.
The Investment Manager may from time to time consider hedging currency and interest rates exposure, but will not generally enter into contracts involving a speculative position in any currency or interest rate.
On an ancillary basis, and for defensive purposes, the Fund may invest in:
• fixed income instruments, (such as convertible bonds, corporate bonds and government bonds and their associated derivative instruments); and
• money market instruments and may hold cash or treasury bills pending reinvestment.