Notification of changes to the underlying funds of various Barings funds
15 July 2019
- M57 Barings International Bond (USD)
- P87 Barings International Bond (EUR)
- J03 Barings Asia Growth
- M56 Barings Australia
- M55 Barings Hong Kong & China
We have been notified by Baring International Fund Managers (Ireland) Limited (“The Company”) of a change in name of the underlying funds of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) and a change to the investment policy of the underlying funds of J03 Barings Asia Growth, M56 Barings Australia and M55 Barings Hong Kong and China. These changes will come into effect from 16 August 2019 (the “Effective Date”).
The Company have confirmed that, from the Effective Date, the name and investment objective and policy of the underlying funds of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) will change. Please see the tables below for more details about the name change and investment policy and objective change of the underlying funds of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR).
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Before 16 August 2019 |
With effect from 16 August 2019 |
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FPI Mirror Fund name |
Barings International Bond (USD) |
Barings Global Bond (USD) |
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Code of FPI Mirror Fund |
M57 |
M57 |
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Corresponding underlying fund name |
Barings International Bond Fund |
Barings Global Bond Fund |
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Before 16 August 2019 |
With effect from 16 August 2019 |
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FPI Mirror Fund name |
Barings International Bond (EUR) |
Barings Global Bond (EUR) |
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Code of FPI Mirror Fund |
P87 |
P87 |
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Corresponding underlying fund name |
Barings International Bond Fund |
Barings Global Bond Fund |
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Investment objective of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) before the Effective Date |
Investment objective of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) from the Effective Date |
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The investment objective of the underlying fund is to achieve an attractive level of income together with long-term growth in the value of assets by investing in a diversified portfolio of fixed interest securities. |
The investment objective of the underlying fund is to seek a maximum total return, through current income generation and capital appreciation. |
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Investment policy of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) before the Effective Date |
Investment policy of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) from the Effective Date |
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The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) will seek to achieve its investment objective by investing at least 70% of its total assets at any one time in an internationally diversified portfolio of both corporate and government fixed interest securities The portfolio may also, from time to time, include securities with floating interest rates. For this purpose, total assets exclude cash and ancillary liquidities. Fixed interest securities will predominately be rated A- or better by Standard & Poor’s (“S&P”) or another internationally recognised rating agency or which are, in the opinion of the Manager, of similar credit status, and floating rate securities should be rated AA- or better by S&P or another internationally recognised credit rating agency or which are, in opinion of the Manager, of similar credit status. Where a security is unrated by S&P, the rating will be that determined by the Investment Manager to be of comparable quality. No restriction on credit quality will apply to sovereign borrowers issuing in their own currency. However, the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) is not expected to invest more than 10% of its net assets in securities issued and/or guaranteed by a single sovereign (including its government, a public or local government of that country) which is rated below investment grade by an internationally recognised rating agency. In the event of split rating, the highest credit rating accredited to the relevant sovereign issuer will be deemed the reference credit rating. The Manager will only invest in securities that are traded on exchanges and markets which are regulated, operate regularly, are recognised and which are open to the public. The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) may also invest in collective investment schemes in accordance with the requirements of the Central Bank up to a maximum of 10% of the Net Asset Value of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR). Although the Net Asset Value of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) is expressed in US dollars, the relative attraction of investments denominated in other currencies is a major consideration of the Manager. The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) may invest in various FDIs as detailed under the section headed “Investment Policy: General” for investment purposes or for efficient portfolio management in accordance with the requirements of the Central Bank but they will not be used extensively for investment purposes. When derivatives are used the underlying funds of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) will be leveraged through the leverage inherent in the use of derivatives. |
The “total return” sought by the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) consists of income and capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular government, industry sector or security. To achieve its objective, the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) will invest primarily in an actively managed globally diversified portfolio which at least 80% of its Net Asset Value is invested in fixed income instruments. The fixed income instruments in which the underlying funds of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) invest may include government bonds, covered bonds, global corporate bonds, notes, debentures, government obligations and sovereign issues, commercial paper, asset-backed securities (“ABS”), commercial and residential-mortgage backed securities (“CMBS” and “RMBS”). The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) may invest in investment grade and up to 50% of the Fund’s Net Asset Value in sub-investment grade fixed income instruments; up to 25% of its Net Asset Value in collateralised and/or securitised products such as covered bonds, ABS, CMBS and RMBS; and up to 10% of its Net Asset Value in securities issued and/or guaranteed by a single sovereign (including its government, a public or local government of that country) which is rated sub-investment grade. The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) may invest in the money market instruments pending investment of subscription monies or payment of redemption proceeds or for temporary defensive purposes, where the Investment Manager determines that such holdings are in the best interests of Unitholders. The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) may also invest in collective investment schemes in accordance with the requirements of the Central Bank up to a maximum of 10% of the Net Asset Value of the underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR). The underlying fund of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) may invest in various financial derivative instruments as detailed under the section headed “Investment Policy: General” in the Prospectus for investment purposes or for efficient portfolio management in accordance with the requirements of the Central Bank but they will not be used extensively for investment purposes. When derivatives are used the underlying funds of both M57 Barings International Bond (USD) and P87 Barings International Bond (EUR) will be leveraged through the leverage inherent in the use of derivatives. |
The below refers to funds J03 Barings Asia Growth, M56 Barings Australia and M55 Barings Hong Kong and China
The Company have further confirmed the below, which we have extracted from the Shareholder Circular of the underlying funds of the above named funds.
Increase in flexibility to invest in China A shares and China B shares
Owing to the increased importance of China A shares and China B shares in the global market, the investment policies of the underlying funds of the above named funds will be changed to increase the underlying funds of the above named funds flexibility to invest in China A shares and China B shares from “no more than 10%” to “no more than 20%” of the underlying funds of the above named funds Net Asset Value.
Currently, the underlying funds of the above named funds may invest in China A shares listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange via the Connect Schemes or indirectly through investment in other eligible collective investment schemes or participation notes. Starting from the Effective Date, the underlying funds of the above named funds may also invest in China A shares through the Investment Manager’s quotas approved under the QFII Regulations and/or RQFII Regulations.
Updates to exposure to domestic Chinese bonds
For greater investment flexibility, the Hong Kong Offering Documents will be updated to provide that the underlying funds of the above named funds may invest in domestic Chinese bonds (including urban investment bonds) via the CIBM initiative (the regime launched in February 2016 for foreign institutional investors to invest in the Mainland China interbank bond markets) and/or Bond Connect (an initiative launched in July 2017 for mutual bond market access between Hong Kong and Mainland China) provided that such investment is in accordance with the requirements of the Central Bank and the relevant authorities in the People’s Republic of China. It is further provided that unless otherwise specified in the relevant Supplement for the underlying funds of the above named funds, the underlying funds of the above named funds do not intend to invest more than 10% of its Net Asset Value in domestic Chinese bonds (including urban investment bonds). Investments in domestic Chinese bonds (including urban investment bonds), if considered appropriate by the Investment Manager, will only be made after the Effective Date. Investment in domestic Chinese bonds (including urban investment bonds) will only be made insofar as such investment is consistent with and within the investment policy of the underlying funds of the above named funds. Investing in the Chinese securities market means that the underlying funds of the above named funds are subject to emerging market risks and also country specific risks. Please refer to the revised Hong Kong Offering Documents once available to review these risks.
Should you have any questions regarding these changes, please contact International Funds & Investments.