ANZ ETFS PHYSICAL RENMINBI ETF. (ASX Code: ZCNH)

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1 ANZ ETFS PHYSICAL RENMINBI ETF (ASX Code: ZCNH)

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3 INVESTMENT BUILDING BLOCKS FOR A CHANGING WORLD Introducing a suite of innovative exchange traded funds (ETFs) designed for Australian investors by ANZ ETFS, a unique collaboration between one of Australia s leading banks and a specialist global provider of exchange traded products. Geared toward investors who seek building blocks for a diverse portfolio, these new ETFs are a cost effective, reliable and transparent way to access investment opportunities that are normally hard to reach, including global equities, commodities and FX investments. Reliable and transparent Traded on the Australian Securities Exchange (ASX), ETFs are registered managed investment schemes which are regulated by the Australian Securities and Investments Commission (ASIC). And because they are publicly listed, investors have access to live intra-day pricing, transparent performance and daily net asset values (NAV) of each ETF. With real-time valuations of their holding, investors can enter or exit the funds at any time throughout the trading day at a known price. 1

4 THE EXCHANGE TRADED FUND THAT LETS YOU CASH IN ON CHINA WHAT IS ANZ ETFS PHYSICAL RENMINBI ETF? The ANZ ETFS Physical Renminbi ETF (ASX code: ZCNH) aims to provide investors with exposure to the performance of the offshore renminbi (RMB), also known as CNH, by tracking its appreciation and depreciation against the Australian dollar. ZCNH invests in bank deposits denominated in CNH, with any interest earned distributed to investors.* ZCNH can be traded by investors on the ASX; it trades just like a share and is settled and held in normal brokerage accounts. No units can be issued until the RMB is delivered to the deposit bank. AT A GLANCE ZCNH Benchmark Management Fee 0.57% Exposure ANZ ETFS Physical Renminbi ETF CNH/AUD Exchange Rate Offshore RMB * There is no guarantee that any interest will be earned or distributed to investors. KEY BENEFITS Pure offshore RMB exposure With ZCNH, investors get exposure to the performance of offshore RMB and key macro-economic themes in China. Diversification tool Currency exposures allow investors to diversify their portfolios. Liquidity As ZCNH invests in offshore RMB, one of the most liquid currencies, it is expected to trade with good liquidity. Cost-effective At 0.57% per annum, ZCNH is a cost-effective way to access the market compared with foreign currency accounts. Security The ETF holds offshore RMB in bank deposits with ANZ. Easy to access Like shares, the ETF is traded on the ASX throughout the day using normal brokerage accounts, and there is no need to open a foreign exchange (FX) account to access RMB. No minimum investment requirement Unlike currency accounts with banks and trading platforms, you can invest in any amount from one ETF unit. Maximum loss capped Margin calls do not apply to an ETF, and the most an investor can lose is the total value of their investment. Transparent The FX rate, interest rate, costs and valuation are publicly available. 2

5 THE ADVANTAGES OF A CURRENCY ETF Currency ETFs are a simple, low-cost way to access foreign currency compared with other options. Simplicity Costs Currency ETF FX Deposit FX Futures/Options Yes All currency ETFs can be traded like a share in normal brokerage accounts Low Management fees, Commissions No Each currency requires a new account and conversion is subject to the provider s requirements High High spreads, Account fees No Requires margin management and risk monitoring Low Commissions Margin Call No No Yes For futures and sellers of options Minimum Investment No 1 ETF unit (When traded on an exchange) Yes Varies with banks, typically A$10,000 Yes Initial margin for futures and sellers of options Maximum Loss The initial invested amount The initial invested amount May lose more than the initial invested amount SMSF eligible Yes Yes Potentially (Approval is subject to many restrictions) RISK FACTORS An investment in the Units involves a significant degree of risk. The following are just some of the risk factors which should be carefully considered by prospective investors before deciding whether to invest in the Units. Specific risks are set out in the ZCNH product disclosure statement. Past performance is not an indication of future performance and the investment performance of the Units could be volatile. Factors affecting the performance of RMB may adversely affect the value of Units including market risk, volatility, government policy and intervention, and interest rate risk. Some of these risks are heightened as RMB is an emerging market currency with a circulation that is tightly regulated by the Chinese government. In recent years, rates of exchange between currencies have become more volatile and this volatility may continue in the future, particularly in relation to emerging or developing nations currencies. An investment in RMB via the ETF will expose investors to risks inherent in holding the exposure via an ETF. These include, among others: Market Risk ETFs aim to replicate the price movements of their underlying benchmark or asset so their performance is dependent on the performance of the underlying currency. Tax As with the majority of investments, ETFs will normally incur some form of taxation. Each investor should obtain independent tax advice. Costs All ETFs incur costs, whether internal costs (related to the product) or external costs (incurred in trading the product). Liquidity Risk Although the Units will be quoted on the ASX there is no guarantee that there will be a liquid market for the Units. Furthermore, in certain circumstances the ASX may suspend trading of the Units or delist a Fund. There are also certain circumstances where the Responsible Entity may limit, reject, scale, or delay redemptions. 3

6 RMB, THE SHORT FORM FOR RENMINBI (RMB), WHICH LITERALLY MEANS THE PEOPLE S MONEY IS CHINA S OFFICIAL CURRENCY. IT HAS OFTEN BEEN CALLED YUAN, MEANING DOLLAR IN CHINESE. THE OFFICIAL SWIFT CODE IS CNY, WHEREAS CNH IS A GENERIC TERM USED IN THE MARKET REFERRING TO RMB BEING TRADED OUTSIDE OF CHINA. RMB A CURRENCY ON THE RISE The RMB is expected to become increasingly influential in financial markets, as China holds its position as the second largest economy in the world. In 2010, the RMB was the 17th most-traded currency, but by 2013 trading had tripled to US$120 billion a day making RMB the 9th most-traded currency, above the NZ Dollar. EXPOSURE TO THE CHINESE ECONOMY In recent years, cumulative total returns in offshore RMB holdings have been higher than Australian dollar holdings. For investors, holding RMB in cash rather than investing in Chinese equities gives exposure to the Chinese economy without the volatility of its equity market Currency Share Rank USD EUR JPY 19 3 GBP AUD CHF CAD HKD SEK NZD KRW SGD NOK MXN INR 1 15 RUB CNY Currency Share Rank USD 87 1 EUR JPY 23 3 GBP AUD CHF CAD MXN CNY NZD 2 10 Source: Bank for International Settlements, Net-net basis, 1 percentage shares of average daily turnover in April Cumulative Total Return in AUD and CNH Positions AUD Holdings CNH Holdings 50% AUD, 50% CNH SEPT 10 MAR 11 SEPT 11 MAR 12 SEPT 12 MAR 13 SEPT 13 MAR 14 SEPT 14 Source: Bloomberg; returns in AUD; Australian interest rate is based on AUD Bank Bill; offshore RMB interest rate is based on CNH 3 Month Deposit 4

7 DISCLAIMER This document is communicated by ANZ ETFS Management (AUS) Limited ( ANZ ETFS ) (Australian Financial Services Licence Number ). This document may not be reproduced, distributed or published by any recipient for any purpose. Under no circumstances is this document to be used or considered as an offer to sell, or a solicitation of an offer to buy, any securities, investments or other financial instruments and any investments should only be made on the basis of the relevant product disclosure statement which should be considered by any potential investor including any risks identified therein. This document does not take into account your personal needs and financial circumstances. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Although we use reasonable efforts to obtain reliable, comprehensive information, we make no representation and give no warranty that it is accurate or complete. Investments in any product issued by ANZ ETFS are not deposits with, or liabilities of, Australia and New Zealand Banking Group Limited ( ANZ ) or any member of the ANZ Group and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither ANZ, ANZ ETFS, ETF Securities Limited nor any other member of the ANZ Group or ETF Securities Group guarantees the performance of any products issued by ANZ ETFS or the repayment of capital or any particular rate of return therefrom. The value or return of an investment will fluctuate and investor may lose some or all of their investment. Past performance is not an indication of future performance. 5

8 TALK TO US TODAY ABOUT DIVERSIFYING YOUR PORTFOLIO To request more information about our products or research: Visit Call info@anzetfs.com Address 5/242 Pitt Street, Sydney NSW 2000 ANZETFS06 ANZ ETFS Management (AUS) Limited ACN /