Aberdeen Asset Management has launched two Asian fixed income funds with exposure to emerging economies in the region. The two funds – the Global Indian Bond fund and the Global Asian Credit Bond fund are aimed at relatively sophisticated investors and have initially been registered for sale in eight European economies.
The Indian Bond fund is a single country-focused strategy and has at least two-thirds of its assets in debt and debt-related securities which are issued by government or government-related bodies domiciled in India and local corporates.
A Luxembourg-domiciled fund, it has an annual charge of 1 per cent and will have a seed capital of US$60m (£38.9m) from internal allocations at inception as a sign of confidence.
Both funds will be managed by a team of 18 fixed income analysts, headed by Victor Rodriguez who is the head of Asia Pacific fixed income at Aberdeen.
A single country-focused bond fund is rare today since there is the risk of political and economic events impacting investments.
However, Aberdeen’s India Bond fund is taking advantage of the timing of the growing Indian economy. The economy has shown signs of growth and improvement due to prime minister Modi’s structural reforms and the measures taken by the central bank governor Rajan.
Aberdeen’s managers and analysts see this as a potent combination, especially since the Indian rupee has managed to hold up, and the inflation has been brought under control by bringing rates down. The Chart shows the performance of the Indian rupee over the past year.
However, the fund will still have risky exposure to political instability or the impact of external events such as a rate hike from the US Federal Reserve.
The second fund focuses on emerging markets in Asia. In the recent past, attractive real yields and stable trade and current account balances in the region have encouraged investors to look at the Asian fixed income market.
But they have had to bear the brunt of factors such as oil prices, the Fed’s monetary policy and other things.
But with developed countries suffering from high levels of debt and low inflation and low yields, investors are slowly looking at the emerging economies in Asia for higher yields.