Asia, a bright spot for income investors

UBS Asia Income Bond Fund

Please read the important information of the fund before proceeding

UBS (HK) Fund Series – Asia Income Bond (USD)

1. The Fund, UBS (HK) Fund Series – Asia Income Bond (USD) ("UBS Asia Income Bond Fund”), invests primarily in debt securities issued or guaranteed by bodies in, registered in, or with significant operations in Asia (including emerging markets) including but not limited to government and non-government bonds (including bonds issued by local authorities, supra-nationals, agencies and corporate entities); fixed rate, variable rate (including floating rate), inflation-linked, convertible, secured, and unsecured, debt securities.

2. The Fund’s investments may be subject to risks associated with debt securities (such as credit/counterparty risk, interest rate risk, downgrading risk, valuation risk, credit rating risk, credit rating agency risk, volatility and liquidity risk, sovereign debt risk, and risk associated with debt securities rated below investment grade and/or unrated), investing in Mainland China (such as regulatory risk, tax risk, RMB currency and conversion risk, CIBM risk, Bond Connect risk, and RQFII risk), currency and exchange rate, currency hedging, concentration and emerging markets.

3. The Fund’s investments are concentrated in Asia (including China). The value of the Fund may be more volatile than that of a fund having a more diverse portfolio of investments, and more susceptible to adverse economic, political, policy, foreign exchange, liquidity, tax, legal or regulatory event affecting Asia (including China).

4. The Fund may invest in debt instruments with loss-absorption features. Such instruments are subject to greater risks when compared to traditional debt instruments as such instruments are typically subject to the risk of being written down or converted to ordinary shares upon the occurrence of pre-defined trigger event(s) which are likely to be outside of the issuer’s control. Such trigger events are complex and difficult to predict and may result in a significant or total reduction in the value of such instruments.

5.The Fund may use financial derivative instruments for investment and hedging purposes. The Fund’s net derivative exposure may be up to 50% of the Fund’s net asset value. The use of financial derivative instruments may involve additional risks such as counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk.

6.In respect of unit classes with "-mdist" in their name, dividends may be paid from capital or effectively out of capital (i.e. pay distributions out of gross income while charging/ paying all or part of the Fund’s fees and expenses to/out of the capital of the Fund, resulting in an increase in distributable income for the payment of distributions) of the Fund, at the discretion of the manager, which amount 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 dividends may result in an immediate decrease of the net asset value per unit.

7.The fixed rate distribution unit classes (i.e. unit classes with "5%-mdist" in their name) continue to distribute in periods that the Fund has negative return or is making losses, which further reduces the net asset value of the Fund.

8.This investment may involve risks that could result in loss of part or entire amount of investors’ investment.

9.Investors should not invest in the Fund solely based on this document and should read the relevant offering documents for further details including risk factors.

10.Investors are responsible for their investment decisions and should seek independent financial and professional advice if required.

Investors who are looking for strong, relatively steady income, Asia continues to be the place to invest.

Portfolio Manager,
UBS Asia Income Bond Fund

Dynamic, diverse, defensive

The Fund is an average investment grade fixed income portfolio that aims to provide good and consistent income through dynamically managed credit, country and duration exposures.

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Regular income stream with defensive average Investment Grade credit rating

Dynamic allocation; flexibility in Investment Grade, High Yield, duration, and currency for diversification

Focus on attractive risk-adjusted returns and total return

Why is Asia a bright spot for income investors?

1. Attractive total return

Asian credits have delivered better absolute and risk adjusted returns than US and European credits historically. This can be attributed to the market’s improving sovereign and corporate fundamentals, spread premium, lower sensitivity to interest rate moves and its increasingly domestic buyer base that provides a supportive technical backdrop.

Source: Bloomberg, J.P. Morgan, UBS Asset Management. Data as of 30.09.2005 – 31.07.2024. Past performance is not indicative of future results.

Source: Bloomberg, J.P. Morgan, Credit Suisse. Data as of 30.09.2005 – 31.07.2024 Past performance is not indicative of future results.

2. Strong macro and corporate fundamentals

Asian countries have been generally on a stable or improving rating trajectory, with all sovereign ratings now investment grade. Credit issuers in Asia are showing lower net leverage than their US counterparts, reflecting better corporate fundamentals, which should continue to support valuations of Asian credits.

Robust credit ratings across the region

Source: Bloomberg Finance L.P. As of end July 2024

Net leverage: Asia Investment Grade (IG) vs. US IG

Why UBS Asia Income Bond?

Payout ratio (data as of 31 August 2024) :
8.0% / 7.9% p.a. (USD/HKD A-mdist ) ^6,7
7.2% p.a. (RMB hedged A-mdist) ^6,7
6.6% p.a. (AUD hedged A-mdist) ^6,7

Defensive, investment grade ~85% of portfolio

Flexible exposure to Asian bonds, active duration management¹

Experienced Team Management²

The asset portfolio is actively managed, so UBS/portfolio managers can change the allocation and positions at any time at their sole discretion.
Sources: Indicators, 2020; Morningstar, 2017. Past performance is not indicative of future results.

Available share classes

Share class	Share class	ISIN	ISIN	Distribution yield	Distribution yield
Share class	Class A USD-acc	ISIN	HK0000679883	Distribution yield	Distribution reinvested
Share class	Class A USD-mdist^6,7	ISIN	HK0000679891	Distribution yield	8.0%
Share class	Class A USD-5%-mdist^6,7	ISIN	HK0000679909	Distribution yield	5.0%
Share class	Class A HKD-mdist^6,7	ISIN	HK0000679917	Distribution yield	7.9%
Share class	Class A HKD-5%-mdist^6,7	ISIN	HK0000679925	Distribution yield	5.0%
Share class	Class A RMB hedged-mdist^6,7	ISIN	HK0000679933	Distribution yield	7.2%
Share class	Class A AUD hedged-mdist^6,7	ISIN	HK0000679941	Distribution yield	6.6%
Share class	Class A JPY hedged-nc-mdist^6,7	ISIN	HK0000959269	Distribution yield	8.0%

Source: UBS Asset Management, August 2024.

³The share classes with “-mdist” aim to pay dividends on a monthly basis. Dividend is not guaranteed. Dividend may be paid out of capital. Share classes with “-mdist” in their name may also make distributions out of capital and realized capital gains, at the discretion of the Management Company, or pay distributions out of gross income while charging/paying all or part of the fund’s fees and expenses to/out of the capital of the relevant fund, resulting in an increase in distributable income for the payment of distributions by the fund and therefore, the fund may effectively pay distributions out of capital. Any distributions involving payment of dividends out of the fund’s capital or payment of dividends effectively out of the fund’s capital (as the case may be) may result in an immediate reduction of the next asset value per share/unit.

⁴ A positive distribution yield does not imply a positive return. Distribution yield = (Dividend per unit on last record date x 12 /Previous month-end NAV) x 100. The distribution yields shown here are for reference only. These share classes continue to distribute in periods that the Fund has negative return/is making losses which further reduces the NAV of the Fund. In extreme circumstances, investors may not be able to get back the original investment amount. Constant distributing share classes must not be seen as alternative to savings account or fixed-interest paying investment.