Investing in China
FAQ's
What is the definition of a warrant?
Warrants are long term call options which gives the holder the right to buy the underlying asset by a certain date (expiration date) for a certain price (exercise price).
Intereffekt China Warrants is a long only fund, and therefore is not allowed to take short positions.
The fund manager can decrease leverage by buying warrants which are deep in the money (the exercise price is lower). In extreme situations the fund manager can hold cash up to 50% of the funds value.
Why is Intereffekt China Warrants not rated by Morningstar?
The Dutch Morningstar website classified Intereffekt China Warrants as ‘overig’ with no benchmark or other funds in its peer group. The Morningstar RatingTM Methodolgy is therefore not applicable. Intereffekt China Warrants was however winner of the 2006 FD/Morningstar Award in the category highest absolute return.
Has Intereffekt China Warrants a limited term?
The fund does not have a limited term. The warrants in portfolio do have a limited term. The remaining term of the warrants in portfolio can be extended by employing the so-called “roll-over” principle, amongst other things. This involves selling warrants that are deep in the money or those with a short time to run, or exchanging them for warrants that have just become out of the money and/or warrants which still have a longer time to run. In the event of extremely adverse market conditions and/or an outflow of funds, it is possible that the opportunities to extend the remaining term are limited, as a result of which the warrants in portfolio could expire and lose their value.
What is the portfolio allocation within the Greater China region?
The net assets of Intereffekt China Warrants are invested in warrants and related derivatives issued on Chinese equities and indices. The funds geographic focus is in principle on Taiwan, Hong Kong, Shenzhen and Shanghai equity markets. The actual portfolio allocation depends on the manager’s view of the risk reward relationship in these markets. You will find the actual asset allocation in the factsheets.
The mainland A share markets of Shanghai and Shenzhen are in principle not open to foreign investors. Since 2005 the China Securities Regulatory Commission started the Qualified Foreign Institutional Investor (QFII) program which gives big financial institutions first access to the Chinese A shares. Intereffekt Investment Funds has not applied for a QFII registration, but does have access to the A share market via the network of institutional investors worldwide.