In its ten-year history, the Cathay High Income Fund of Funds has been a solid performer in the Fund of Funds category, delivering income and capital appreciation.

The Manager's strategy adopts a dual configuration of core plus satellites and constantly reviews economic indicators and interest rate-trend adjustment strategies. It is based around core holdings, supplemented with active management dependent on changing macroeconomic or liquidity conditions to generate risk-adjusted returns. Analysts are also specialized in their respective industries to drive outperformance of the ICE US high-yield corporate bond index and peers.

According to cited examples, the fund benefited from portfolio rebalancing through the COVID-19 pandemic with downside protection as bonds cut from 90% in January to 77% before being reversed to 85% as authorities injected new liquidity into bond markets. This timely intervention led to positive first half 2020 returns when many peer fund returns were negative.

With this bond fund being a fund of funds, the Chief Portfolio Manager of this strategy is ultimately responsible for maintaining the investment style's consistency.

In the past three years, the average annual portfolio turnover has been reasonable and was between 41% and 50%. The liquidity of managers and analysts has been about 1%, which is stable.

We would like to see the fund conduct stress tests to ensure that investment strategies perform under different conditions and report on whether investment targets have met ESG and corporate governance standards.

This fund has been reviewed by three industry veterans of the Benchmark judging committee.