Invest in the fast-growing bond market

UBS China High Yield Fund

Please read the important information of the fund before proceeding

UBS (HK) Fund Series – China High Yield Bond (USD)

1. The Fund, UBS (HK) Fund Series – China High Yield Bond (USD) (or “ UBS China High Yield Fund”) invests primarily in debt securities issued by entities which are domiciled or generate a predominant share of their sales and/or their profits in greater China.

2. The Fund intends to invest at least 70% of its net assets in non-investment grade bonds (i.e. assigned with a rating of below BBB- by Standard & Poor’s or Fitch Ratings or below Baa3 by Moody’s) or bonds which are unrated. Such securities are generally subject to lower liquidity, higher volatility and greater risk of loss of principal and interest than high-rated debt securities.

3. The Fund’s investments in emerging markets, e.g. PRC, may involve a greater risk than developed markets including sharp price movements, liquidity risk and currency risk. The Fund’s investment in a single market may be subject to higher level of risks comparing to a fund investing in a more diversified portfolio/strategy. Under extreme market circumstances, the Fund may suffer substantial loss.

4. The Fund may use financial derivative instruments (”FDI”) for hedging and investment purposes. Although FDI will not be used extensively for investment purposes, the use of derivatives may involve additional risks, e.g. leverage, liquidity, counterparty risks.

5. Specifically for the A-mdist unit class(es), the Fund may at the discretion of the Manager make distributions out of capital or out of gross income while charging/paying all or part of the Fund’s fees and expenses to/out of capital of the Fund, resulting in an increase in the payment of dividends by the Fund. Payment of dividends out of capital or on a gross-of-fee basis may result in an immediate reduction of the net asset value per unit. Any distributions 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.

6. Investors should not invest in the Fund solely based on this document and should read the relevant offering document.

China is the second largest bond market globally. China's offshore bond market also offers investors enhanced diversification, liquidity, and broad investment opportunities with attractive yield.

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1. Attractive yields

China high yield bonds offer relatively attractive yields and a positive fundamental outlook. Longer term, we hold a positive outlook on the China high yield sector with the continued accommodative stance of central bank policies and sound credit fundamentals.

Asset class	Asset class	Yield (%)	Yield (%)
Asset class	China USD High Yield	Yield (%)	25.5
Asset class	Asia High Yield	Yield (%)	14.2
Asset class	USD High Yield	Yield (%)	8.9
Asset class	EUR High Yield	Yield (%)	8.1

2. Focus on total return, not just yield

The Fund focuses on attractive risk adjusted returns and total return, not just yield. Through active management, dynamic risk positioning, and diligent security selection, the Fund seeks to generate attractive total returns throughout market cycles.

3. Attractive entry opportunity

Current China high yield spread levels are trading close to historic peaks since 2005 with a percentile rank of 96%¹. The only periods when spreads traded wider than they are currently at, are during the 2008 Global Financial Crisis and the 2011 Sovereign Debt Crisis. We see an attractive entry point for China high yield to capture the spread compression opportunity relative to other opportunities in fixed income, whilst being cognizant of the risks of this asset class.

¹Source: J.P. Morgan. JACI China High Yield Index. As of end June 2022.