Fund buyers to extend emerging market debt binge
Emerging market bonds have been on a strong run this year, and Europe’s investors think the rally isn’t over yet.
Emerging market bonds have been on a strong run this year, and Europe’s investors think the rally isn’t over yet.
As we move through the halfway point of 2017, many investors have grown wary of the risk asset rally and are returning to the relative safety of fixed income funds. But which have performed the best year-to-date? And which have not fared so well?
Portfolio advisers have been looking at equity market valuations rather nervously for some time, tilting towards less risky assets, taking profits and holding more cash.
Foreign investors are now able to buy and sell Chinese bonds via Hong Kong after the country’s central bank approved its Bond Connect scheme, but no date has been set to allow investors in China to invest in foreign bonds.
Indonesia’s tax amnesty brought in revenue, which lowered the fiscal deficit and enhanced the appeal of government bonds, says Allianz Global Investor’s David Tan.
Mirae Asset Global Investments in Hong Kong has launched an Asia bond fund, which aims to capture the most attractive opportunities within the Asian corporate bond space.
Malaysia’s sharia-compliant mutual funds have seen assets under management decline from the peak of 40.7% in March 2016 to 39.4% in March 2017, according to data from Morningstar.
UBS Asset Management has cut the fees on its new exchange traded funds (ETFs) which track a benchmark index for US Treasury Inflation Protected Securities (Tips) after recording $470m (£366.4m) of inflows in less than seven months.
There are very few ETF providers capable of tracking bond markets in a quality way, according to State Street Global Advisors.
After a recent survey found more than 80% of investors believed corporate bonds were overvalued, a JP Morgan portfolio manager has argued the case for keeping money in the asset class.
Bondholders have been penalised by traditional benchmarks that have failed to grasp the current reality of low and negative yields, First State Investment’s Jamie Grant has said.
Kames Capital is set to launch a short-dated high yield bond fund aimed at providing attractive risk adjusted returns, while maintaining low interest rate and credit sensitivity.