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A Diversified Portfolio of Income Generating Assets Carefully Selected and Managed by an Expert and Experienced Investment Team
FUND OBJECTIVEThe Fund’s investment objective is to generate consistently high levels of income from a diversified and international portfolio of asset-backed corporate bonds, debt and loan instruments issued by small to medium sized companies. The Fund can invest in any currency, country or sector to maximise risk adjusted returns and to pursue prudent diversification. Issuer selection is controlled with both quantitative and qualitative analysis with a focus on the identification and measurements of all risks, especially default risk. The target income is 10% per annum net of Fund fees.
FUND SUMMARY• Diversified Fund investing in asset-backed corporate bonds, debt or loan instruments• Focused on small to medium sized companies with strong near-term cash flow generation• Fund target income of 10% paid annually, net of Fund fees• Thorough investment process including country, sector and company research and financial ratio analysis• Open ended fund with a recommended 5 year plus investment term• Monthly subscriptions• Quarterly redemption facility with 90 days notice• Investors benefit from the protection of an independent administrator, auditor, Fund Director and Fund advisor• Highly experienced asset management team regulated by the Cayman Islands Monetary Authority to provide
investment management services• The Fund is also regulated by the Cayman Islands Monetary Authority as an Administered Mutual Fund
managementasset management
Hypa Asset Management is an active fund manager specialising in the selection and management of high yielding assets; bonds, corporate debt and loans. The management team’s investment process utilises fundamental analysis at a country, sector and company level. All risks associated with a prospective investment are allocated a required rate of return individually and collectively to ensure investors are appropriately compensated with a high level of income for the risks taken.
Hypa Asset Management is licensed to provide investment management services by the Cayman Islands Monetary Authority (CIMA) and the Global High Income Fund is also regulated and administered as a Mutual Fund with CIMA.
HYPA ASSET MANAGEMENT LTD
ANTICIPATED DURATION OF HOLDINGS RISK PROFILE
FUND STRATEGYThe Fund specialises in lending to small and medium sized companies generally via UK PLCs in loan packages free of complex clauses, options and other features. The bonds are fixed in duration and the interest payable is also fixed. The Fund will hold the underlying bonds, or other debt or loan instruments, from inception to redemption thus avoiding the potential realisation of a loss on a bond sale due to interest rate movements and other factors during the life of the loan. This ‘buy and hold’ strategy also reduces the Fund costs via the absence of trading fees. The Hypa Asset Management team appraises underlying companies and their bonds very carefully, selecting firms that are predicted to generate high levels of cash-flow in the near term and through the duration of the bond, or other debt or loan instrument. To further protect the interests of the Fund, only asset-backed bonds, or other debt or loan instrument, secured on the assets and equity of the underlying company will be considered.
The Fund will generally invest in asset backed bonds issued by UK Public Limited Companies (“UK PLCs”) independently audited by PKF Littlejohn LLP. Each UK PLC will appoint a security trustee and custodian, currently Global Custodial Services, assigned to protect the interests of the Fund, as bond holder.
CORPORATE BOND FUNDSWhen an investor buys a corporate bond they are, in practice, lending the company money. In return they receive interest and the issuer promises to repay the debt on a specified date. This means that in terms of risk, bonds are generally less risky than equities but more risky than cash. The key to reducing this risk is to carefully select which companies and bonds to invest in and to spread the fund portfolio over a number of bonds to lessen the company specific risk.
Bonds are therefore investments representing the debt of a company. They are loans, or “IOUs” issued by these organisations and bought by banks, insurance companies, fund managers and private investors. Fund investors are therefore indirectly buying a number of bonds and are appointing the fund manager to appraise, select and manage the portfolio of bonds on their behalf.
The global bond market is actually larger than the equity market. Bonds are issued in a variety of currencies and may differ greatly from each other in terms of risk, yield, date of maturity and sometimes other features such as call and put options, which allow the bond issuer or investor to redeem the bond ahead of the final maturity date.
CORPORATE BONDS - THE KEY RISKSThere are a number of risks associated with investing in corporate bonds including, but not limited to; default risk, market risk, company specific risk, interest rate risk and credit rating risk. The investment manager to the Fund believes its investment philosophy, bond selection process and attention to detail minimises these risks and that fund investors are rewarded with high levels of income potential and a high degree of capital protection to compensate them for the risks that remain.
Our approach to limiting the impact of risks on the fund includes: • Diversification across companies, sectors, countries, rating and bond duration • A preference for companies with strong cash flow generation• Asset backed securitised lending only• Avoidance of high risk company ‘recovery’ scenarios • Use of financial ratio analysis including short term liquidity analysis (cash ratio) and longer term solvency
testing (interest coverage and debt to equity)• Comprehensive due-diligence, risk analysis and stress testing• A focus on bond issuers with a clean corporate history of prior borrowing and repayments• A policy of buy at inception and hold until redemption• A fund portfolio of clean and simple loans, avoiding complex bond options
MANAGEMENT TEAM
Simon James WelshFund Director
Vanessa Wits Senior Manager
Marc HounsellBusiness Development Manager
Mike Young, CFA Fund Advisor
Hypa Asset Management Limited is run by authorised finance professionals with over 40 years combined experience in alternative investments in the global financial markets.
FUND KEY FACTSFund Name: Global High Income Fund
Fund Sector: Fixed Interest, Global
Fund Structure: Exempted Company administered as a mutual fund with CIMA
Investment Manager: Hypa Asset Management Limited
Fund Lawyer: Appleby (Cayman) Ltd
Fund Administrator: Forbes Hare Fund Services
Regulator: Cayman Islands Monetary Authority
Investment Term: Recommended 5 years plus
Target Return: 10% income per annum, net of fund fees
Minimum investment: USD 10,000
Subscriptions: Monthly at latest NAV
Subscription fee: Nil
Placement fee: Nil
Management fee: 1.0% per annum
Performance fee: 20% of Fund profits above a 10% p.a. hurdle
Redemptions: Quarterly with 90 days notice required
Redemption fee: Nil
Fund valuation Policy: IFRS, annual audited, bi-annual unaudited
DISCLAIMERThe Global High Income Fund LTD is suitable for sophisticated investors, who do not require immediate liquidity for their investments, for whom an investment in the fund does not constitute a complete investment programme, and who fully understand and are willing to assume the risks involved in the fund’s investment programme. Subscribers for shares must represent that they are acquiring the shares for investment. No offer to sell or solicitation of an offer to buy is being made in any jurisdiction in which such offer or solicitation would be unlawful. Other than registration with the cayman islands monetary authority, the offering of securities hereby has not been filed with or approved or disapproved by any regulatory authority of any country or jurisdiction, nor has any such regulatory authority passed upon or endorsed the merits of this offering or the accuracy or adequacy of this document or the confidential memorandum to the fund. Any representation to the contrary is unlawful. Shares are not registered for sale, and there will be no public offering of the shares.
SingaporeThe offer or invitation to subscribe for or purchase shares in the Fund (the “Shares”), which is the subject of this Offering Memorandum, is an exempt offer made only: (i) to “institutional investors” pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the “Act”), (ii) to “relevant persons” pursuant to Section 305(1) of the Act, (iii) to persons who meet the requirements of an offer made pursuant to Section 305(2) of the Act, or (iv) pursuant to, and in accordance with the conditions of, other applicable exemption provisions of the Act.
No exempt offer of the Shares for subscription or purchase (or invitation to subscribe for or purchase the Shares) may be made, and no document or other material (including this Offering Memorandum) relating to the exempt offer of Shares may be circulated or distributed, whether directly or indirectly, to any person in Singapore except in accordance with the restrictions and conditions under the Act. By subscribing for Shares pursuant to the exempt offer under this Offering Memorandum, you are required to comply with restrictions and conditions under the Act in relation to your offer, holding and subsequent transfer of Shares.
The Fund is not authorised or recognised by the Monetary Authority of Singapore (“MAS”) and the Shares are not allowed to be offered to the retail public in Singapore. The Fund is a restricted scheme under the Sixth Schedule to the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations of Singapore.
Restricted foreign schemes may only be offered to certain types of investors listed in s305 SFA and to accredited investors whose total net assets or annual income exceed certain amounts (as set out in s4A SFA) or at a minimum of S$200,000 per transaction.
CONTACTSInvestment ManagerHypa Asset Management LtdClifton House | 75 Fort StreetPO Box 1350 | Grand Cayman KY1-1106Cayman Islands
Tel: +44 207 559 3601Fax: +44 207 559 3401
AdministratorForbes Hare Fund ServicesCassia Court | Camana Bay | Suite 716, 10 Market StreetGrand Cayman | KY1-9006Cayman Islands
www.forbeshare.com
Fund LawyerAppleby (Cayman) LtdClifton House | 75 Fort Street PO Box 190 | Grand Cayman | KY1-1104 Cayman Islands
www.applebyglobal.com
