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SCMP Reporter

INVESTORS in Hongkong are being offered two new choices in the unit trust and mutual fund selection available in the territory.

  The funds offer different types of investment by risk and potential return to cater for the go-go risk taker seeking out high capital appreciation and the widow or orphan investor who is extremely cautious.

  Jardine Fleming is launching a Pacific smaller companies trust, to follow its successful Eastern smaller companies trust.

  Fidelity Investment is launching an income fund called Fidelity Income Plus, offering an annualised yield of five per cent. Inflation is currently around nine per cent so the return does not protect the real value of capital.

   It is the first no-load retail fund from a major fund manager in the territory.

  The Pacific smaller companies trust will include smaller companies in Japan as well as the rest of Asia.

  The Eastern smaller companies fund does not include Japanese companies in its geographic asset allocation. It has a fixed offer unit price period to June 4 at 4 pm.

  The unit price is US$10.53 and the minimum investment is $1,000.

  ''The objective of the trust is to achieve long-term capital growth in US dollar terms through investing in a selection of those companies judged to have the greatest potential for earnings growth and the management technology and financial resources to achieve it,'' says JF.

  The entry charge on the fund is five per cent, the redemption charge is one per cent and the annual management fee is 1.5 per cent.

  Smaller company funds offer the potential for higher rewards, but there is also higher risk from investing in these types of companies.

  For investors who regularly punt on smaller companies in any case, this is an obvious choice to diversify risk by geography and across a collective investment fund which is placed in a large number of companies.

  The dangers of smaller companies investment include severe earnings dilution through regular placement of shares, unfair asset transactions in the disposal or injection of assets against the interests of minorities, and a higher potential of corporate failure.

  Given the macro-economic conditions fuelling growth in economies in Asia and a turn-around in Japan, a smaller companies fund such as this can offer exposure to a high-growth segment of the regional corporate matrix.

  In contrast, the Fidelity income fund is design to attract risk-averse savers who are frustrated with the low interest rates payable on bank deposits.

  Marketing director Richard Wascoat said: ''There is over HK$1.45 trillion invested in products such as time deposits and bank accounts.''   This product is design to attract some of that money.

  The no-load fund will be managed from Boston and will invest in short-term, quality bonds such as US Government and corporate bonds.

  ''These bond issues generally provide higher yields than traditional savings vehicles available in Hongkong,'' Mr Wascoat said.

  The fund will invest in bonds of no more than three-year maturities.

  ''This will be the first bond fund with no sales or redemption fees in Hongkong,'' he said.

  ''Compared to time deposits and swap deposits, this means people can have easy access to their money.''   Fidelity recently launched the territory's first 24-hour fund information services with free phone facilities for investors in China, Japan and Singapore.

  The group has an exclusive deal to distribute product through the 28-branch network of Kincheng Bank, in the first deal if its kind involving a mainland-linked bank.

  Kincheng Bank, a Bank of China subsidiary, is expected to bring the products of other fund managers on to its distribution panel to be sold to retail bank customers.



Two offerings give punters a wide choice