OLI IPO & PLACEMENT FUND
The Oli IPO & Placement Fund is an unregistered managed investment scheme structured as a unit trust. It is open only for subscription by eligible investors (these are Australian-tax-resident wholesale clients ONLY).
The overriding objective of the Oli IPO & Placement Fund is to seek outperforming the Performance Benchmark (being 5% per annum) and to achieve an overall growth for the Fund with a target investment return (after Liabilities and before tax and Performance Fees) on investment of at least 15% per annum (combining income and capital gain) in the long run. This is referred to as the “Objective” in the Information Memorandum.
The Objective is not intended to be a forecast of future performance and the Fund may or may not achieve its Objective. It is merely an indication of what the Fund aims to achieve over the long term. The Objective is set based on analysis and models built on a range of dynamic assumptions which include but not limited to assumptions on domestic and international financial markets, domestic and international regulatory environments, and overall economic outlook.
The Investment Manager implements the following investment strategies (together referred to as “Investment Strategies”) on behalf of the Fund:
Strategy 1: Subscription in IPO and Placement Opportunities
According to research and analysis of the Investment Manager, IPO and Placement opportunities are likely to generate relatively high return in the short term with listed premium and buying discounts further increasing the potential return. The Investment Manager will invest a large proportion of the Fund to quality IPO and Placement opportunities with an aim to:
obtain a short-term return for the Fund; and
increase the safety margin for investment in Value-Growth stocks through Placements.
However, please note that participation in IPO and Placement opportunities are generally subject to “scale-back”, meaning that although the Fund may receive fewer shares than what it applies for or even none. Considering the potential impacts of “scale-back” on the Fund, the Investment Manager will also employ Strategy 2 with an aim to achieve the Objective.
Strategy 2: Investment into Value-Growth Stocks
A proportion of the Fund’s assets is invested in Value-Growth stocks.
Value Stocks refers to companies that are undervalued and the shares of which are usually traded at a price below the price it should be based on its financial status and technical trading indicators.
Growth Stocks refer to shares in companies that have substantial potential for growth in the foreseeable future. Growth companies may currently be growing at a faster rate than the overall markets, and they often devote most of current revenue towards future expansion. An example of growth stock is Amazom.Com Inc (AMZN). Value-Growth Stocks mean Growth Stocks that are undervalued.
Based on the Investment Manager’s research and analysis, Value-Growth Stocks generally exhibits higher price volatility (i.e., higher beta) than income stocks, meaning that the price of Value-Growth Stocks may fluctuate more significantly than income stocks in response to external and internal factors such as a company announcement. Despite their relatively high volatility, in the long run, Value-Growth Stocks are likely to generate higher return than income stocks.
When executing this strategy, the Investment Manager will use fundamental analysis and identification of catalysts to exploit inefficiencies in the market arising from investors’ behavioural biases and slow reaction to changes in market and stock fundamentals.
Strategy 3: Risk Management Practices
The Fund will NOT engage in “market- neutral” strategy but can use derivatives to manage market and long position risks. For example, the Investment Manager may adopt “covered-call” strategy to lock the short-term profits and hedge the decline risk or use “put-sell” strategy to explore the short-term price changes and enhance the total return.
The Investment Manager will also adopt a range of diversification and piecework strategies to further reduce investment risks. The Investment Manager will also implement a comprehensive risk management system to continuously identify, assess and mitigate risks. This will include localised “stop-loss” criteria targeting individual shares and ETFs as well as global “stop-loss” criteria for the entire portfolio.
The Trustee retains overall responsibility for the Fund. The Trustee engages the Investment Manager to assist the Fund to achieve its Objective through investment services provide by the Investment Manager. Any changes to the Objective and/or Composition of the Fund must be made by the Trustee.
The Trustee authorises the Investment Manager to make investment decisions for the Fund in accordance with this IM and the Investment Management Agreement, including tactical (day-to-day) trading decisions, within the ambits of the Objective and Composition of the Fund. The Trustee may revoke this authorisation at any time at its sole discretion. The Investment Manager must not engage in any activities or make any investment decision that will cause changes to the Objective and/or the Composition without appropriate prior consent from the Trustee.