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A fund can offer different unit (or share) classes to cater to the varying needs of investors. As such, it is not uncommon for funds to offer unit classes denominated or dealing in different currencies, or having accumulation or distribution features. Additionally, an unlisted fund can offer a listed unit class (or ETF unit class) for listing and trading on a stock exchange, while an exchange-traded fund (ETF) can offer an unlisted unit class for distribution in the primary market.

The listed and unlisted unit classes within a single fund would follow the same investment strategies, but investors of different unit classes could be subject to different pricing, dealing arrangements and risks. Listed unit class will generally be subject to risk similar to ETFs, whereas unlisted unit class will generally be subject to risk similar to unlisted investment funds. You may refer to the article “ETF versus unlisted funds” to understand more about the key differences between listed and unlisted unit classes.

When investing in a fund with listed and unlisted unit classes, you should be aware of the following:

  • The net asset value (NAV) per unit of each of the listed and unlisted classes may be different due to different fees and cost applicable to each class.
  • Units of listed class are traded on the stock exchange on an intraday basis at the prevailing market price (which may diverge from the corresponding NAV), while units of unlisted class are dealt over-the-counter on each dealing day with the trading price calculated based on the dealing day-end NAV with no access to intraday liquidity on stock exchange. Depending on market conditions, trading in the listed units may be at an advantage or disadvantage compared to trading in the unlisted units.
  • In a distressed market scenario, investors can redeem the units of the unlisted class at NAV. However, investors of the listed units cannot do so and may have to exit the fund on the secondary market at a significant discount. On the other hand, investors of the listed units could sell their units during the day to crystallise their profits and losses, but investors of the unlisted class could only redeem their units at the end of the dealing day.

For details on the funds with listed and unlisted classes, please refer to the relevant offering documents and product key facts statements. You should carefully read the risk factor(s) relating to the differences between listed and unlisted classes as disclosed in the offering documents. If in doubt, please consult professional advisors.

 

20 March 2019