Investment involves risk. Past performance is not indicative of future performance. Investor should not make any investment decision solely based on the information provided on this material. Investors should refer to the Explanatory Memorandum and the Key Facts Statement of the Sub-Fund for further details, including the product features and risk factors before making any investment decisions.
Bosera USD Money Market ETF (the “Sub-Fund”) is a sub-fund of the Bosera Global Exchange Traded Funds Series Open-ended Fund Company (“Company”), which is a public umbrella open-ended fund company established under Hong Kong law with variable capital with limited liability and segregated liability between sub-funds. The Company has been registered with the Securities & Futures Commission (“SFC”) as an OFC and the Company and the Sub-Fund have been authorized by the SFC pursuant to section 104 of the Securities and Futures Ordinance. The SFC’s registration or authorization is not a recommendation or endorsement of the Company nor the Sub-Fund nor does it guarantee the commercial merits of the Company or the Sub-Fund or its performance. It does not mean the Company or the Sub-Fund is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors.
The Manager employs an actively managed investment strategy for the Sub-Fund. The Sub-Fund does not seek to track any index or benchmark, and there is no replication or representative sampling conducted by the Manager. It may fail to meet its objective as a result of the Manager’s selection of investments, and/or the implementation of processes which may cause the Sub-Fund to underperform as compared to prevailing money market rates or other money market funds with a similar objective.
The Sub-Fund’s investment portfolio may fall in value due to any of the key risk factors below and therefore your investment in the Sub-Fund may suffer losses. There is no guarantee of the repayment of principal.
The 7-day annualised yield and the 30-day annualised yield are based on 7-day period and 30-day period of Bosera USD Money Market ETF (Tokenised Class)’s past performance respectively and do not represent an actual one-year return.
The assumptions involved in the calculation of the 7-day annualised yield and the 30-day annualised yield are hypothetical.
Investors should be aware of fixed income securities investment risks, including
Short-term fixed income instruments risk - As the Sub-Fund invests substantially in short-term fixed income instruments with short maturities, the turnover rates of the Sub-Fund’s investments may be relatively high and the transaction costs incurred as a result of the purchase or sale of short-term fixed income instruments may also increase which in turn may have a negative impact on the NAV of the Sub-Fund. The Sub-Fund’s underlying fixed income securities may become more illiquid when nearing maturity. It therefore may be more difficult to achieve fair valuation in the market.
Credit / counterparty risk - The Sub-Fund is exposed to the credit/default risk of issuers and the guarantors (if applicable) of the fixed income securities it invests in.
Volatility and liquidity risk - The fixed income securities in the Greater China markets (in particular Mainland China and Taiwan) and other emerging markets may be subject to higher volatility and lower liquidity compared to more developed markets. The prices of securities traded in such markets may be subject to fluctuation. The bid and offer spreads of the price of such securities may be large and the Sub-Fund may incur significant trading costs.
Interest rate risk – Investment in the Sub-Fund is subject to interest rate risk. Generally, the prices of fixed income securities rise when interest rates fall, whilst their prices fall when interest rates rise.
Credit rating risk - Credit ratings assigned by rating agencies are subject to limitations and do not guarantee the creditworthiness of the security and/or issuer and/or guarantor at all times.
Credit rating agency Risk - The credit appraisal system in Mainland China and the rating methodologies employed in Mainland China may be different from those employed in other markets. Credit ratings given by Mainland China rating agencies may therefore not be directly comparable with those given by other international rating agencies.
Downgrading risk – The credit rating of a fixed income instrument or its issuer or guarantor may subsequently be downgraded. In such case, the Sub-Fund’s investment value may be adversely affected. The Manager may or may not be able to dispose of the fixed income instruments that are being downgraded.
Valuation risk - Valuation of the Sub-Fund’s investments may involve uncertainties and judgmental determinations. If such valuation turns out to be incorrect, this may affect the NAV calculation of the Sub-Fund.
Sovereign debt risk - The Sub-Fund’s investment in securities issued or guaranteed by governments may be exposed to political, social and economic risks. In adverse situations, the sovereign issuers may not be able or willing to repay the principal and/or interest when due or may request the Sub-Fund to participate in restructuring such debts. The Sub-Fund may suffer significant losses when there is a default of sovereign debt issuers.
Investors should be aware of risks associated with tokenised Class of shares, including
Blockchain technology risk - The blockchain technology is relatively new and is subject to various threats or risks that can adversely impact the Sub-Fund. Notwithstanding the fact that blockchains are secured by means of cryptography, there is a possibility that such security measures can be compromised (for example, blockchain systems can be susceptible to generic network attacks and phishing attacks) and thereby resulting in the unauthorized alteration of the blockchain or the Tokens that may disrupt the operation of the Sub-Fund.
Furthermore, a blockchain network may experience a “fork” (i.e., “split”) of the network, which would result in the existence of two or more versions of the blockchain network running in parallel with duplication of the same Token, but with each version’s native asset lacking interchangeability, potentially competing with each other for users and other participants. Where a fork occurs in one of the blockchain networks used by the Sub-Fund, the Manager, in consultation with the Custodian and the Tokenisation Provider, will act in the best interest of investors and have the sole discretion to determine which of the resulting blockchain networks will continue to be used in respect of the Sub-Fund’s tokenised Shares and which will be discontinued.
There is also a risk of undiscovered technical flaws associated with systems utilizing blockchain technology. In addition, there is a possibility that new technologies or services that inhibit access to, or utility of, a blockchain may emerge. Blockchain technology may also never be implemented to a scale that provides identifiable economic benefit.
Token security risk - The loss or theft of the private key of an eligible distributor will compromise its digital wallet and expose its corresponding investor(s) to risk of misappropriation of Tokens or inability to access Tokens associated with the wallet. In the event of loss or theft of Tokens, the investors can be fully recovered with the lost or stolen Tokens as the Manager has control over the smart contract and may compel the transfer of the lost or stolen Tokens to a secure address.
Cybersecurity risk - The Digital Platform contains the complete transaction history of the tokenised Shares and certain data on the blockchain utilised is available to the public. As a result, certain information other than personal identifying information may be publicly accessible by way of tools that are capable of displaying activity on the blockchain. Personal identifying information is maintained separately by the Manager, the Custodian, the Token Custodian and the eligible distributors (as the case may be) and is not available to the public.
While each of the Manager and the Tokenisation Provider has put in place adequate policies and measures to counter cybersecurity risks, such policies and measures cannot provide absolute security. The techniques used to obtain unauthorised access to data and information change frequently and may be difficult to detect for long periods of time. Hardware or software acquired from third parties may also contain defects in design or manufacture or other problems that can unexpectedly compromise information security. In the case of data security breaches where such personal identifying information is exposed to the public, such information can be used to determine a Shareholder’s identity and investing history in the Sub-Fund.
Delay risk - Delays in transaction processing can occur on the blockchain utilised for the tokenised Shares. For example, delays can occur when computers on the network are unable to reach a consensus on transactions on the blockchain. During a delay, it will not be possible to record transactions in the Shares on the blockchain which may create discrepancies between on-chain and off-chain records, thereby impacting investors’ ability to subscribe or redeem the tokenised Shares. Delay risk may have adverse impact on both subscription and redemption processes of the tokenised Shares and investors’ receipt of tokenised Shares or redemption proceeds may be delayed.
Dependence on service providers - The Manager and the Sub-Fund rely on various parties (including eligible distributors) to facilitate the administration and offering of the tokenised Shares through the use of blockchain and blockchain-related technology and maintain the relevant operating infrastructure (e.g. software, systems and smart contract technology). Such operations may be adversely impacted if any such party ceases to provide the relevant services.
Regulatory risk - As the use of blockchain technology is relatively new, Hong Kong regulations regarding blockchain are evolving and subject to development that may negatively impact the operation of the Sub-Fund in relation to the administration and offering of the tokenised Shares.
Potential challenges in application of existing laws - There are differences in the way tokenised Shares are dealt with and recorded, compared to traditional funds and their means of distribution. This can make the resolution of issues concerning tokenised Shares more complex and difficult under existing laws.
Operational and technical risk - Smart contracts used for tokenisation may contain coding errors, bugs, or vulnerabilities that could result in loss of Tokens, unauthorised operations, or system failures and may introduce additional security risks. Integration between traditional fund administration systems and blockchain infrastructure may face operational disruptions. Business continuity plans may prove inadequate in blockchain-specific scenarios.
Risk associated with virtual asset trading platforms (as distributors) - The virtual asset trading platforms on which tokenised Shares in the Sub-Fund may be offered are relatively newly established. The use of virtual asset trading platforms may expose investors to, amongst other things, counterparty risks of the platform operators and liquidity risks whereby demand of the tokenised Shares of the Sub-Fund may be limited and such platforms may impose limits or restrictions on which moneys deposited in such platforms can be withdrawn (such as minimum withdrawal amount, and daily withdrawal limit). Furthermore, virtual asset trading platforms are also common targets of cybercriminals.
Investors should be aware of emerging market risk, Mainland China investment risk and concentration risk, including
The Sub-Fund will invest in emerging markets such as Mainland China, which are subject to higher risks (for example, liquidity risk, currency risk, political risk, regulatory risk, legal and taxation risks, settlement risk, custody risk and economic risk) and higher volatility than more developed markets. Some emerging markets securities may be subject to brokerage or stock transfer taxes levied by governments, which would have the effect of increasing the cost of investment and which may reduce the realised gain or increase the loss on such securities at the time of sale.
Investing in Mainland China, involves a greater risk of loss than investing in more developed markets due to, among other factors, greater political, social, tax, economic, foreign exchange, liquidity and regulatory risks; exchange rate fluctuations and exchange control; less developed settlement system; governmental interference; the risk of nationalisation and expropriation of assets, and custody risk and high volatility risk.
The Sub-Fund will invest primarily in USD-denominated short-term deposits and high quality money market instruments (which may include fixed income securities). The Sub-Fund may also be concentrated in a particular market or region, including Greater China. The Sub-Fund is therefore likely to be more volatile than a broad-based fund that adopts a more diversified strategy. The value of the Sub-Fund may be more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory events affecting the USD money markets, or the market or region in which its investments are focused.
Bank deposits are subject to the credit risks of the relevant financial institutions. The Sub-Fund may also place deposits in non-resident accounts (NRA) and offshore accounts (OSA), which are offshore deposits with offshore branches of Mainland Chinese banks. The Sub-Fund’s deposit may not be protected by any deposit protection schemes, or the value of the protection under the deposit protection schemes may not cover the full amount deposited by the Sub-Fund. Therefore, if the relevant financial institution defaults, the Sub-Fund may suffer losses as a result.
Eurozone risk - In light of ongoing concerns on the sovereign debt risk of certain countries within the Eurozone, the Sub-Fund’s investments in the region may be subject to higher volatility, liquidity, currency and default risks. Any adverse events, such as credit downgrade of a sovereign or exit of members of the European Union from the Eurozone, may have a negative impact on the value of the Sub-Fund.
Investors should be aware of the differences in dealing arrangements between Listed and Unlisted Classes of Shares, including
Tokenised Class of Shares is not listed on the SEHK and is therefore a type of unlisted classes of Shares of the Sub-Fund (“Unlisted Classes of Shares”). Listed Class of Shares of the Sub-Fund (“Listed Class of Shares”) are listed on the SEHK and are traded on the SEHK like listed stocks.
Investors of Listed and Unlisted Classes of Shares are subject to different pricing and dealing arrangements. The NAV per Share of each of the Listed and Unlisted Classes of Shares may be different due to different fees and cost applicable to each class. The trading hours of the SEHK applicable to the Listed Class of Shares in the secondary market and the dealing deadlines in respect of the Unlisted Classes of Shares are also different. For the avoidance of doubt, the dealing deadline applicable to the Listed Class of Shares in the primary market and the dealing deadlines in respect of the Unlisted Classes of Shares are the same.
Shares of the Listed Class of Shares 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 Shares of the Unlisted Classes of Shares 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 Unlisted Classes of Shares may be at an advantage or disadvantage compared to investors of the Listed Class of Shares.
In a stressed market scenario, investors of the Unlisted Classes of Shares could redeem their Shares at NAV while investors of the Listed Class of Shares in the secondary market could only redeem 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 Shares could sell their Shares on the secondary market during the day thereby crystallising their positions while investors of the Unlisted Classes of Shares could not do so in a timely manner until the end of the day.
Risk Associated with Differences in Dealing and Fee Arrangements between tokenised Class of Shares and non-tokenised Class(es) of Shares - Dealing arrangements in respect of tokenised Class of Shares and non-tokenised Class(es) of Shares are different, the applicable dealing procedures with the eligible distributor (in the case of tokenised Class of Shares) and the distributor (if applicable, in the case of non-tokenised Classes of Shares) may be different. Investors should check with the eligible distributor or distributor for the applicable dealing procedures and timing. The NAV per Share of each of the tokenised Class of Shares and non-tokenised Class(es) of Shares may also be different due to the different fees (such as the management fee and tokenisation fee) applicable to each such class of Shares. Any or all of these factors may lead to a difference in the NAV of the tokenised Class of Shares and non-tokenised Class(es) of Shares.
Currency risks - Underlying investments of the Sub-Fund may be denominated in currencies other than its base currency. 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.
Distributions out of or effectively out of capital risk - Payment of distributions out of capital 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 in the NAV per Share of the Sub-Fund.
Termination risks - The Sub-Fund may be terminated early under certain circumstances, for example, if the size of the Sub-Fund falls below USD 10,000,000 (or equivalent). Investors may not be able to recover their investments and suffer a loss when the Sub-Fund is terminated.
This material has not been reviewed by the Securities and Futures Commission.
