LETTER TO UNITHOLDERS OF THE "La Française Rendement Global 2022*" MUTUAL FUND / UAE
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Re: Merger-absorption operation of the "La Française Rendement Global 2022*" mutual fund by the "La Française Rendement Global 2028"* sub-fund of the "La Française" SICAV
As a unitholder in the La Française Rendement Global 2022 mutual fund, we would like to thank you for the trust you have placed in us.
We wish to inform you that La Française Asset Management, the management company of the La Française Rendement Global 2022 mutual fund, has decided to merge the La Française Rendement Global 2022 mutual fund (hereinafter the "Absorbed Fund") into the “La Française Rendement Global 2028"* sub-fund of the "La Française" SICAV (hereinafter the "Absorbing UCI").
La Française Asset Management would like to offer you the possibility of taking a position in the Absorbing UCI, whose management is based on a similar strategy but with a longer maturity and a broader investment universe. The issues have a maturity of five years or more and refinancing at less than five years is almost non-existent. The Absorbed Fund has experienced a significant number of early redemptions ("callables"), and further portfolio acquisitions have been rendered difficult in the context of a reduced primary market. Moreover, reinvestment conditions do not allow for optimal fund performance.
Furthermore, we consider that a traditional carry strategy would not be in the interests of investors insofar as a significant part of the expected performance over the recommended investment period has already been achieved. As such, the estimated residual return is low. As a reminder, the objective of the Absorbed Fund* is, over the recommended investment period of eight years from the launch date until 31 December 2022, to outperform (net of fees) bonds issued by the French Government denominated in euro and maturing in 2022.
As an example, the estimated net return of the R unit on 2 June 2021 until the maturity of the Absorbed Fund* will be 0% after deducting the estimated running costs (1.16%) and hedging costs (0.43%).
The outstanding amount of the Absorbed Fund* on 2 June 2021 is 126,493,115.12 euros.
As a result, the merger-absorption into the Absorbing UCI would enable you to gain new market opportunities before the 2022 maturity.
However, you are currently a holder of the Absorbed Fund* which is currently exposed to a decreasing interest rate sensitivity over time and which is now low. The Absorbing Fund has a longer maturity and a higher interest rate exposure with a sensitivity of 0 to 9.
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