The Fund invests primarily in debt securities whose issuers, guarantors and/or domiciled countries could or would directly or indirectly benefit from China’s Belt and Road vision of increasing land and sea paths to connect Asia, Europe, Middle East and Africa and their adjacent seas for closer economic co-operation.
Investors should note the general investment risk, risk of misalignment between the Fund’s investment theme and the Belt and Road vision, risks of investing in companies related to the Belt and Road Initiative, emerging markets, liquidity risk, sovereign debt risk, portfolio turnover risk, Eurozone risk, hedged unit classes risk, RMB class(es) related risk, counterparty risk, and currency and foreign exchange risk.
Debt Securities is subject to (a) interest rate risk; (b) credit risk (including default risk, credit rating risk, credit rating downgrading risk and liquidity risk); (c) risks relating to below investment grade and unrated securities; and (d) valuation risk.
Financial derivative instruments may be used for hedging. The use of derivatives may become ineffective and the Fund may suffer significant losses.
For Monthly Distribution-1 unit class (MD1), (a) the Fund Manager may at discretion pay distributions out of the capital and/or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any such distributions may result in an immediate reduction of the net asset value per unit in respect of such unit class after the distribution date; (b) Investments in MD1 are not an alternative to a savings account or fixed-interest paying investment, investors may not be able to get back the original investment amount; and (c) The fixed amount of distributions per month is subject to risk of exchange rate fluctuations. (Note 1)
In addition, investors of MD-1 that are currency hedged (MD1 hedged) should be aware of the uncertainty of relative interest rates. The net asset value of the MD1 hedged may fluctuate and may significantly differ from other unit class due to fluctuation of the interest rate differential between the currency in which the MD1 hedged is denominated and the base currency of the Fund and may result in a greater erosion of capital than other non-hedged unit class. (Note 2)
The value of the Fund can be volatile and could go down substantially.
Investors should not base their investment decision on this material alone.
Be the 1st mover to B&R fixed income amid low interest rate environment
The market is assigning a 100% probability to a US Federal Reserve rate cut by the second half of 2019. LIBOR, a benchmark for short-term interest rates, has fallen since the beginning of 2019.
A dramatic change in interest rate outlook is signaling a low interest rate environment globally, which has prompted investors to look for income opportunities.
We believe a thematic approach focusing on income opportunities arising from the China-led Belt and Road initiative could potentially offer investors attractive income and capital growth opportunities.
Join us as the first mover to the Belt and Road fixed income investment journey.
Source: Bloomberg, as of June 30, 2019.
A long term commitment of the Chinese government
The Belt and Road (B&R) Initiative promotes land and sea connectivity along Asia, Europe, Middle East and Africa.
The B&R Initiative was written into the Constitution of the Chinese Communist Party to deliver long-term capital commitments.
More than 150 countries and international organizations have signed agreements on Belt and Road cooperation with China.
*The B&R Initiative covers countries which represent more than 60% of the world’s population, 30% of the world’s GDP and 35% of world trade. Source: How Big is the Belt and Road?, HKTDC Belt and Road Portal, data as of 15 February 2017.
Multiple sectors are benefitting from the B&R initiative
We expect China to invest USD 150 to 200 billion in the B&R countries per year. Robust economic activity as a result of infrastructure development could benefit B&R countries and various sectors.
Prospects for Belt and Road countries
Attractive fixed-income opportunities
Economic improvement tends to benefit both government and corporate bond issuers. This presents attractive total return potential (which includes income and price appreciation) for Belt and Road related fixed-income securities.
Invesco Belt and Road Bond Fund
The Invesco Belt and Road Bond Fund is a pioneer in investing in debt securities whose issuers could benefit from China’s Belt and Road vision.
The Fund aims to capture total return potential in the B&R region through a diversified portfolio of USD fixed income securities. This helps to reduce potential currency risk**.
As of Apr 30, 2019 the Fund has invested in 17 countries# along the B&R region**.
Annualized dividend for A (USD)-MD-1 Shares: 6.40%*
#The 17 countries include China, Indonesia, Mongolia, Hong Kong, Maldives, Papua New Guinea, Malaysia, Ghana, Nigeria, Angola, Switzerland, France, Great Britain, Bahrain, Egypt, Uzbekistan and Saudi Arabia.
*Annualized dividend (%) = (Amount/Share X 12) ÷ Price on record date. Upon dividend distribution, the Fund's net asset value may fall on the ex-dividend date. All distributions below USD 50 in value (or its equivalent) will be automatically applied in the purchase of further shares of the same class. Positive distribution yield does not imply a positive return.
** Source: Invesco, data as of 30 April 2019. Portfolio weightings and allocations are subject to change.
Belt and Road Video
Investment involves risks. Past performance is not indicative of future performance. Investors should read the relevant prospectus for details, including the risk factors and product features. This material has not been reviewed by the Securities and Futures Commission and is issued by Invesco Asset Management Asia Limited (景順投資管理亞洲有限公司).