The fund aims to provide a higher total return (the combination of income and capital growth) with smaller changes in returns on average, than company shares from around the world, over any three to five-year period. There is no guarantee that the fund will achieve a positive return over any period, and you may not get back the amount you originally invested.
Investment policy and strategy
Core investment: Typically, the fund will use derivatives to invest in a range of assets, including company shares, bonds and currencies. It is fully flexible and has no limits or ranges in any particular asset class. As a result of its use of derivatives, the fund may be required to hold a large amount of cash and bonds. The fund may also invest directly or through other funds.
Using derivatives to invest also allows the fund to create ‘leverage’, meaning that the fund can gain exposure to investments that exceed its value, thus increasing potential returns (or losses) in both rising and falling markets.
In addition, derivatives are used to reduce risk and costs and to manage the impact of changes in currency exchange rates on the fund’s investments.
Other investments: The fund may also hold convertibles, cash, deposits, warrants and money market instruments (for example, debt due to be repaid within a year).
Strategy in brief: The fund has a very flexible investment approach, with the freedom to invest in different types of assets from anywhere in the world. The approach combines in-depth research to work out the ‘fair’ value of assets over the medium to long term, with analysis of market reactions to events to identify investment opportunities. In cases where the manager believes the opportunities are limited to a few areas, the fund may be very concentrated in certain assets or markets. Such strategies may result in greater changes in the fund’s short-term performance.
Bonds: Loans to governments and companies that pay interest.
Convertibles: Bonds issued by companies that usually pay a set rate of interest and which can be exchanged for predetermined amounts of company shares.
Derivatives: Financial contracts whose value is derived from other assets.
Warrants: Financial contracts which allow the fund manager to buy stocks for a fixed price until a certain date.
Risks associated with the fund
The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as rise. There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.
The fund may use derivatives to gain exposure to investments exceeding the value of the fund (leverage). This may cause greater changes in the fund’s price and increase the risk of loss.
The fund may use derivatives with the aim of profiting from a rise or a fall in the value of an asset (for example, a company’s bonds). However, if the asset’s value varies in a different manner, the fund may incur a loss.
Changes in currency exchange rates will affect the value of your investment.
If the share class is hedged (H share class), it aims to mirror the performance of another share class. We cannot guarantee that the hedging objective will be achieved. The hedging strategy will limit holders of the hedged share class from benefiting if the hedged share class currency falls against the US dollar.
The fund will invest in emerging markets which are generally smaller, more sensitive to economic and political factors, and where investments are less easily bought and sold. In exceptional circumstances, the fund may encounter difficulties when selling or collecting income from these investments, which could cause the fund to incur a loss. In extreme circumstances, it could lead to the temporary suspension of dealing in shares in the fund.
Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in the fund’s shares.
Some transactions the fund makes, such as placing cash on deposit, require the use of other financial institutions (for example, banks). If one of these institutions defaults on their obligations or becomes insolvent, the fund may incur a loss.
The fund may invest more than 35% in securities issued by any one or more of the governments listed in the fund prospectus. Such exposure may be combined with the use of derivatives in pursuit of the fund objective. It is currently envisaged that the fund’s exposure to such securities may exceed 35% in the governments of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, New Zealand, Singapore, Sweden, Switzerland, UK, USA although these may vary subject only to those listed in the prospectus.
The Fund allows for the extensive use of derivatives
The fund may be very concentrated at times which could result in greater fluctuations in the funds short-term performance.