With inflation on the rise and unable to grab ibonds, what other dividend-paying investment tools are available?

Over the past year, the novel coronavirus has ravaged, causing global economic market turmoil. In response to economic contraction and to avoid greater turbulence or financial crisis caused by tightening financial conditions, various economies have loosened monetary policies. In times of crisis, every family needs continuous stable cash for emergencies. Current deposits offer the best liquidity, but bank interest rates keep declining, failing to keep up with inflation! Is there a product in the market that can provide stable and reliable returns while continuously providing necessary cash for family expenses each month? Of course, there is. Here, I would like to introduce everyone to the dividend fund that is currently highly sought after in the market.

What is a dividend fund?

As the name suggests, a dividend fund is a fund that regularly distributes profits to the account, meaning that after investors inject funds at a certain time, they will regularly receive cash from the fund, allowing investors to maintain a certain cash flow while enjoying capital appreciation opportunities. Since this portion of profits distribution does not require redemption fees, it is more attractive than fund redemption. At the same time, excellent dividend funds are equipped with outstanding fund managers and research teams, who allocate reasonably to avoid high-risk sectors and flexibly switch positions to achieve stable long-term returns.

ChinaAMC Select Asia Bond Fund has excellent dividend and return performance, and may be the best choice for investors to hedge against inflation.

ChinaAMC Select Asia Bond Fund mainly invests in Asia bonds denominated in US dollars, accounting for no less than 70% of net assets. Investors can choose between accumulated or dividend distribution policies based on their investment preferences. According toChinaAMC Select Asia Bond Fund Class A USD (Distributing)(Intended to distribute monthly) in the latest distribution calculation in May 2021(Assuming income can be reinvested)The fundAnnualized distribution rate[i] can reach 6.72% (Distribution rate is not guaranteed, dividends may be paid from capital or actually in kind)Of course, ChinaAMC Select Asia Bond Fund Class A USD (Distributing) not only stands out in terms of distributions, but also has shown solid growth in cumulative returns since inception, delivering substantial returns to investors.

Performance[ii] of ChinaAMC Select Asia Bond Fund Class A USD (Distributing)

Our fund manager believes that the fund's outstanding performance is mainly attributed to diverse income sources. The investment strategy leans towards macro allocation, capturing investment opportunities in different market environments, flexibly allocating between long and short-term bonds, and earning long-term returns through balanced strategies. The fund manager focuses on asset liquidity and seeking value opportunities in different markets and sectors rotations. The ChinaAMC Select Asia Bond Fund Class A USD (Distributing) has delivered a return of +3.79%[iii] year to date in 2021, and +24.84%[iv] in 2020, demonstrating remarkable performance.

Accumulated return ii

*ChinaAMC Select Asia Bond Fund Class A US Dollar Unit (Distribution) was established on April 18, 2017

Annual return ii

Carefully analyzing this fund, from a regional distribution perspective, it currently invests 52.82% in domestic regions of China. In terms of sector, it mainly invests in financial (including real estate) sector bonds with higher profit potential, accounting for 52.05% of the portfolio. The overall average rating of the bonds is BB. The weighted average yield to maturity of the bonds currently held by the fund is 5.15%, with a weighted average remaining term of 3.41 years.

So for ordinary investors, how should they choose an excellent dividend-paying fund from numerous products?

Is a higher dividend yield always better? Actually, not necessarily. It is worth noting that this portion of cash dividends is not entirely equivalent to investment returns, as it may include both investment profits and the investor's original principal. Therefore, some dividend-paying funds may affect the fund's net asset value if they involve distributing the principal. Only outstanding managers with a strong ability to generate continuous returns can provide attractive dividends while avoiding touching the principal as much as possible. Therefore, while paying attention to the dividend yield, remember to focus on the actual total return included in the distribution.

For example, 1) Assuming the fund's NAV (Net Asset Value) at the beginning of the year is 100 yuan, and each fund unit distributed a dividend of 5 yuan per unit during the year (dividend yield of 5%), then the average bond price rose by 2 yuan. At the end of the year, the unit fund NAV is 102 yuan. Without considering other expenses during the fund investment process, the investor's actual annualized return is 7%; 2) Assuming the fund's NAV (Net Asset Value) at the beginning of the year is 100 yuan, and each fund unit distributed a dividend of 10 yuan per unit during the year (dividend yield of 10%), but then the average bond price fell by 3 yuan, and the unit fund NAV is 97 yuan at the end of the year. The investor's actual return rate remains 7%.

As shown in the examples above, investors should focus more on the total return of the fund, and select based on the fund's historical performance, overall strategy, fund manager style, etc. A clearly-defined, steady-income dividend fund can be considered as a flexible and diversified investment tool.
$ChinaAMC Select Asia Bond Fund (HK0000301892.MF)$

***Important Notice: Investment involves risks. The price of fund shares can rise or fall, past performance does not indicate future fund returns, and future returns are not guaranteed. You may also lose the principal amount of your investment. This data does not constitute an invitation to buy or sell any securities or funds or to engage in any trading, nor does it constitute any investment advice. This document is for your reference only, and you should not rely on this document to make any investment decisions. Some of the data or information contained in this document is obtained from third parties not affiliated with us. We reasonably believe that such data or information is accurate, complete, and up to date as shown. ChinaAMC Fund (Hong Kong) Limited ensures the accurate reproduction of such data or information, but does not guarantee the accuracy and completeness of the data or information provided by such third parties. You should not make any investment decisions solely based on this data; you should carefully read the fund sales documents to understand the fund details and risk factors. If necessary, seek independent professional advice. This document is issued by ChinaAMC Fund (Hong Kong) Limited. This document has not been reviewed by the Securities and Futures Commission of Hong Kong.

Annualized distribution yield = [(1 + distribution per fund unit / ex-dividend date net asset value per fund unit) ^ 12] - 1

The calculation method for fund performance is based on the end-of-calendar-year net asset value per unit of the fund against the net asset value, including reinvested dividends. Since May 15, 2020, the fund's investment strategy has changed. The environment in which the fund performance was achieved before May 15, 2020, is no longer applicable. The fund's investment objectives and strategies were also amended on March 10, 2020, December 6, 2019, and January 26, 2018. Source: ChinaAMC Fund (Hong Kong), data as of May 31, 2021.

Source: ChinaAMC Fund (Hong Kong), data as of May 31, 2021.

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