1      General investment risk

The Sub-Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore, investors’ investments in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.

2      Equity market risk

The Sub-Fund’s investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors.

3      Passive investment risk

The Sub-Fund is passively managed and the Manager will not have the discretion to adapt to market changes due to the inherent investment nature of the Sub-Fund. Declines in the Index are expected to result in corresponding decreases in the Sub-Fund’s value.

4      Robotics sector risk

The Sub-Fund invests primarily in the equity securities of companies that engage in the robotics development business and as such, is particularly sensitive to risks to those types of companies. These risks include, but are not limited to, small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation.

Securities of robotics companies, especially companies with smaller market capitalisation and/or limited operating history, tend to be more volatile than securities of companies that do not rely heavily on technology. Rapid change to technologies that affect a company’s products could have a material adverse effect on such company’s operating results. Robotics companies may rely on a combination of patents, copyrights, trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies, which may be subject to the risks of loss or impairment of intellectual property rights or licences. There can be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior to such companies’ technology.

Increasing global regulatory scrutiny in this area may also impede the development of new robotics product and technology, and hamper the commercial rollout of such products and affect market demand. There is no guarantee that the products produced by these companies will materialise into commercially successful products. The success of companies in the robotics sector is typically dependent on the companies’ ability to maintain relationships with their technology partners. If a company’s relationship with a technology partner is impaired or terminated, the company may not be able to enter into a new technology alliance on a timely basis or on commercially favourable terms, which could result in significant additional cost or disruptions to its businesses.

5      Concentration risk

The Sub-Fund’s investments are concentrated in Hong Kong and the U.S. market and in the robotics sector. The value of the Sub-Fund may be more volatile than that of a fund having a more diverse portfolio of investments and may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting the Hong Kong and U.S. markets and the robotics sector.

6      Risk associated with small-capitalisation/mid-capitalisation companies

The Sub-Fund may make investments in small-capitalisation and mid-capitalisation companies. The stocks of such companies may have lower liquidity and their prices are more volatile and susceptible to adverse economic developments than those of larger capitalisation companies in general.  

7      Tracking error risk

The Sub-Fund may be subject to tracking error risk, which is the risk that its performance may not track that of the Index exactly. This tracking error may result from the investment strategy used, and fees and expenses. The Manager will monitor and seek to manage such risk in minimising tracking error. There can be no assurance of exact or identical replication at any time of the performance of the Index.

8      New index risk

The Index is a new index and has minimal operating history by which investors can evaluate its previous performance. There can be no assurance as to the performance of the Index. The Sub-Fund may be riskier than other exchange traded funds tracking more established indices with longer operating history.

9      Currency risk

Underlying investments of the Sub-Fund may be denominated in currencies other than the base currency of the Sub-Fund. The NAV of the Sub-Fund may be affected unfavourably by fluctuations in the exchange rates between these currencies and the base currency and by changes in exchange rate controls.

10    Trading risk

The trading price of the Units on the SEHK is driven by market factors such as the demand and supply of the Units. Therefore, the Units may trade at a substantial premium or discount to the Sub-Fund’s NAV.

As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Units on the SEHK, investors may pay more than the NAV per Unit when buying Units on the SEHK, and may receive less than the NAV per Unit when selling Units on the SEHK.

11    Trading hour differences risk

As the markets in which the Sub-Fund invests may be open when Units in the Sub-Fund are not priced, the value of the securities in the Sub-Fund’s portfolio may change on days when investors will not be able to purchase or sell the Sub-Fund’s Units. Differences in trading hours between the overseas stock exchanges and the SEHK may increase the level of premium/discount of the Unit price to its NAV.

12    Risks relating to securities lending transactions

Securities lending transactions may involve the risk that the borrower may fail to return the securities lent out in a timely manner. The Sub-Fund may as a result suffer from a loss or delay when recovering the securities lent out. This may restrict the Sub-Fund’s ability in meeting delivery or payment obligations from redemption requests.

As part of the securities lending transactions, the Sub-Fund must receive cash and/or non-cash collateral of at least 100% of the valuation of the securities lent valued on a daily basis. However, there is a risk of shortfall of collateral value due to inaccurate pricing of the securities lent or change of value of securities lent. This may cause significant losses to the Sub-Fund.  

13    Risks associated with investment in FDI

Risks associated with FDI include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The leverage element/component of an FDI can result in a loss significantly greater than the amount invested in the FDI by the Sub-Fund. Exposure to FDI may lead to a high risk of significant loss by the Sub-Fund.

The Sub-Fund may use FDIs for hedging purposes, and in adverse situations, such hedging may become ineffective and the Sub-Fund may suffer significant loss.

The Manager may adopt synthetic representative sampling strategy for the Sub-Fund, which may involve investing up to 50% of its NAV in funded total return swaps. In case of swaps, the Sub-Fund may suffer significant loss if a swap counterparty fails to perform its obligations, or in case of insolvency or default of the swap counterparty(ies).

14    Reliance on market maker risk

Although the Manager will use its best endeavours to put in place arrangements so that at least one market maker will maintain a market for the Units and that at least one market maker gives not less than 3 months’ notice prior to terminating market making under the relevant market maker agreement, liquidity in the market for the Units may be adversely affected if there is no market maker for the HKD traded Units. There is also no guarantee that any market making activity will be effective.

15    Distributions out of/effectively out of capital risk

Payment of dividends out of 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 such original investments. Any such distributions may result in an immediate reduction of the NAV per Unit of the Sub-Fund. This may also reduce the capital that the Sub-Fund has available for investment in future and may constrain capital growth.

16    Differences in dealing arrangements between Listed and Unlisted Classes of Units risk

Investors of Listed Class of Units and Unlisted Class of Units are subject to different pricing and dealing arrangements. The NAV per Unit of each of the Listed Class of Units and Unlisted Class of Units may be different due to different fees and cost applicable to each class. The trading hours of SEHK applicable to the Listed Class of Units in the secondary market and the dealing deadlines in respect of the Listed Class of Units (on the primary market) or the Unlisted Class of Units are also different.

Listed Class of Units are traded on the stock exchange in the secondary market on an intraday basis at the prevailing market price (which may diverge from the corresponding NAV), while Unlisted Class of Units are sold through intermediaries based on the Dealing Day-end NAV and are dealt at a single valuation point with no access to intraday liquidity in an open market. Depending on market conditions, investors of the Listed Class of Units may be at an advantage or disadvantage compared to investors of the Unlisted Class of Units.

 

In a stressed market scenario, investors of the Unlisted Class of Units could redeem their Units at NAV while investors of the Listed Class of Units in the secondary market could only sell at the prevailing market price (which may diverge from the corresponding NAV) and may have to exit the Sub-Fund at a significant discount. On the other hand, investors of the Listed Class of Units could sell their Units on the secondary market during the day thereby crystallising their positions while investors of the Unlisted Class of Units could not do so in a timely manner until the end of the day.

17    Differences in cost mechanisms between Listed Class of Units and Unlisted Classes of Units risk

Investors should note that different cost mechanisms apply to Listed Class of Units and Unlisted Classes of Units. For Listed Class of Units, the transaction fee and the duties and charges in respect of creation and realisation applications are paid by the participating dealer applying for or realising such units and/or the Manager. Investors of Listed Class of Units in the secondary market will not bear such transaction fees and duties and charges (but for the avoidance of doubt, may bear other fees, such as SEHK trading fees).

On the other hand, the subscription and realisation of Unlisted Classes of Units may be subject to a subscription fee and realisation fee respectively, which will be payable to the Manager by the investor subscribing or realising. In addition, in determining the subscription price and realisation price, the Manager is entitled to add/deduct an amount which it considers represents an appropriate allowance for the fiscal and purchase/sale charges.

Any or all of these factors may lead to a difference in the NAV of the Listed Class of Units and Unlisted Classes of Units.

18   Termination risk  

The Sub-Fund may be terminated early under certain circumstances, for example, if the size of the Sub-Fund falls below HKD50,000,000 (or equivalent). Investors may not be able to recover their investments and suffer a loss when the Sub-Fund is terminated. 

Risk Notice: Investment involves risks. Past performance is not indicative of future performance. Investors should refer to the fund prospectus for further details, including the product features and risk factors. Fullgoal Asset Management (HK) Limited (AZX665), a subsidiary of The Fullgoal Fund Management Company Limited in mainland China, is licensed with the Securities and Futures Commission ("SFC"). By using this website you acknowledge that your access to the information on this website is governed by the lahkwbs-file of Hong Kong. There is no intention to offer or sell products in countries or jurisdictions where such offer or sale would be unlawful under the relevant domestic law. All investors accessing the website do so on their own initiative and are responsible for compliance with applicable local lahkwbs-file and regulations. This web page is published by Fullgoal Asset Management (HK) Limited and this web page has not been reviewed by the Securities and Futures Commission in Hong Kong. Your use of this site signifies that you accept our Terms and conditions of use | Privacy policy。 © 2023 Fullgoal Asset Management (HK) Limited. All rights reserved.