InvestmentsMay 15 2015

Fund review: Barings HK range

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Fund review: Barings HK range

Baring Asset Management has launched a series of funds domiciled in Hong Kong – the Global Multi Asset Income, European Equity Income fund and Greater China Equity funds.

The funds are a step forward for Barings in expanding its product range in the country. In order to meet the demand of renminbi-dominated products in Hong Kong, Barings has introduced the RMB-hedged class for all three funds that will provide a safety net to investors due to exchange rate fluctuations.

The Global Multi Asset fund, the first in the series, offers a range of asset classes and geographies to investors for lower risks and better returns. Managed by London-based Sonja Laud, the fund uses active and flexible asset allocation approach to provide diversification and lower volatility as compared to regular equity income products. The fund has a management fee of 1.5 per cent.

The European Equity fund seeks to generate income and long-term capital by investing in European securities. Managed by Paul Morgan, the fund aims to play on the belief that European equities offer a higher dividend yield at attractive prices across the developed equity markets.

The last in the series is the Greater China Equity fund, which will be managed by Hong Kong-based Laura Luo and aims to achieve long-term growth in the value of assets by investing in Hong Kong, China and Taiwan.

www.barings.com

Comment:

This series of funds provides choice and flexibility to investors. Each of these is led by an experienced fund manager and sits within a range of other funds launched by the firm.

The funds could enable investors to diversify risk in their investment. For example, the Global Multi-Asset fund offers flexibility for investors to choose across asset classes and geographies. It invests at least 70 per cent of its net asset value at any one time in equity and equity-related securities. The other 30 per cent may be invested in debt securities.

While all three funds provide flexibility and low volatility options, they also face risks associated with investments. The Global and European Equity fund face risks associated with European markets and political and economic instability in specific countries. A potential default of a particular country may also result in increased currency and credit risk on issuers from those countries and the future stability and growth of those countries may be negatively affected.

Some other risks associated with these funds include liquidity, currency, distribution and counterparty risk.

The Greater China Equity fund invests heavily in Hong Kong, China and Taiwan. While China’s economy is aided by supportive policies and stronger exports, Barings believes that the rise in consumption and the middle-class segment will also support sustainable growth in relevant sectors. But with the Chinese slowdown worrying investors, the fund may face economic risks.