HAITONG CHINA ALTERNATIVE FUND SICAV-RAIF: Haitong China High Income Fund
The Sub-Fund invests directly or indirectly in fixed income securities from companies based in Mainland China or with a significant risk exposure to Mainland China. Haitong China High Income Fund is mainly exposed to bonds from Chinese Local Government Financing Vehicles (LGFVs) and State-Owned Enterprises (SOEs).
Haitong China High Income Fund is considered as falling within the scope of Article 6 of the SFDR as it does not actively promote Sustainability Factors and does not maximize portfolio alignment with Sustainability Factors. The Sub-Fund however remains exposed to Sustainability Risks.
Sustainability Risks are nevertheless integrated in the investment decision making and risk monitoring to enhance risk-adjusted returns. The Sub-Fund’s investments are based on an internal rigorous credit selection process that takes into consideration unique factors besides financial information due to specific asset class characteristics, such as contribution to public welfare and the development of local economies, corporate governance procedures, political and financial support from Chinese Provincial and Central Governments. External research is also analyzed as well as ESG external scoring, as mentioned in Haitong Bank’s Sustainability Policy. However, in most cases of the relevant investment universe, there is no ESG external scoring due to the lack of available and reliable data.
Social issues are considered when analyzing investments for the Sub-Fund, mostly those related to the scope of business of a company under scrutiny, since its role may be fundamental to the development of a region, city or municipality in China, by engaging in public welfare projects, welfare housing development, infrastructure construction (such as roads, bridges, gas, electricity and water networks) or the development of economic zones and technology parks, for example. The investment process also takes into consideration governance factors, by assessing company characteristics such as: a firm’s business model and its corporate governance practices; political status of a bond issuer (administrative level, asset size, etc); government shareholding position and ownership structure; likelihood of government support and transfer payments; quality of disclosed financial information.