“Asian High Yield has come of age as a more established asset class offering investors a strategy with high income, lower sensitivity to interest rate movements and attractive total return potential.”
- Bryan Collins, Head of Asian Fixed Income and Portfolio Manager
Asian high yield bonds offer an average yield of 6.4%, which is more than their counterparts in the US (6.2%) and Europe (4.3%) as of December 20171.
The shorter duration strategy offers the potential for a more stable performance as the Federal Reserve raises rates in the US.
One of the first funds of its type in the region, this leading strategy has consistently outperformed other funds in its peer group2.
See how the fund has performed over recent years. The chart below represents the value of HK$10,000 invested in this fund in 2013 compared with HK$10,000 invested in the Index.
We remain positive on Asian high yield market. Risk sentiment has weakened compared to the start of the year, but the strong global growth backdrop remains intact.
The US gradually raised interest rates, suggesting that we are further into an expansionary phase of the market cycle. The impact of rising rates on Asian high yield bonds is limited given their short duration position.
Concerns over a global trade war are likely to lead to continued volatility. Our base case remains that the US and China will eventually resolve their differences. Nonetheless, the recent volatility has made valuations more attractive over a medium-term horizon.
As at 31 March 2018