Notification of changes to the underlying funds of various Allianz Funds
26 November 2019
- J48 Allianz Emerging Asia Equity
- R62 Allianz GEM Equity High Dividend
- R63 Allianz Japan Equity
- R44 Allianz Total Return Asian Equity
We have been notified by Allianz Global Investors Fund (“The Company”) of the application of swing pricing mechanism that will affect the underlying funds of the above named funds. This application of swing pricing mechanism is effective from 23 December 2019 (the “Effective Date”).
The Company have confirmed the below:
The Investment Manager may need to accommodate significant purchasing, selling and/or switching activity by investors which result in high transaction costs associated with an underlying fund’s portfolio trades and as a result, the underlying funds may suffer reduction of the NAV per share (“dilution”).
Therefore, in order to reduce the dilution impact and to protect existing Shareholders interests, a swing pricing mechanism (“Swing Pricing Mechanism”) is currently adopted in respect of certain underlying funds as disclosed in the HK Prospectus. With effect from the Effective Date, the Swing Pricing Mechanism may be adopted across all underlying funds.
If on any Valuation Day, the aggregate net investor(s) transactions in Shares of the affected underlying funds exceed a pre-determined threshold, as determined as (i) a percentage of that underlying fund’s net assets or as (ii) an absolute amount in that underlying fund’s base currency from time to time by the Company’s Board of Directors based on objective criteria, the NAV per share may be adjusted upwards or downwards to reflect the costs attributable to net inflows and net outflows respectively (“Adjustment”) if the Board of Directors consider it is in the best interest of the investors. The net inflows and net outflows will be determined by the Company based on the latest available information at the time of calculation of the NAV.
The value of the Adjustment will be reset by the Company on a periodic basis to reflect an approximation of current dealing costs. The estimation procedure for the value of the Adjustment captures the main factors causing dealing cost (e.g. bid/ask spreads, transaction related taxes or duties, brokerage fees etc.). Such Adjustment may vary from underlying fund to underlying fund and will not exceed 3% of the original Net Asset Value per Share. The value of the adjustment is determined by the Management Company’s valuation team and approved by and internal swing pricing committee. On a regular basis (minimally twice a year) the value of the Adjustment is reviewed by the Management Company’s valuation team and the review results are approved by the swing pricing committee.
The application of the Swing Pricing Mechanism will have no impact on the processing or settlement timeline for subscription, switching and redemption in respect of the underlying funds of the above named funds.
As a result of the above changes, the underlying funds may be subject to swing pricing risk. The size of the adjustment impact is determined by factors such as the volume of transactions, the purchase or sale prices of the underlying assets and the valuation method adopted to calculate the value of such underlying assets of the underlying funds. The value of the Adjustment reflects the estimated dealing cost of an underlying fund. If the estimation of costs is not accurate, the application of the Swing Pricing Mechanism may not achieve the desired results.
Please refer to the Prospectus of the underlying funds of the above named funds for further information.
Should you have any questions regarding these changes, please contact International Funds & Investments.