The best and worst performers in 2017 among all funds available to Hong Kong and Singapore investors was dominated by Chinese equity funds at the top and energy, commodity and hedge funds at the bottom.
Today, FSA looks at best and worst performing fixed income funds.
The leader among funds authorised for sale in Hong Kong was the Hong Kong-domiciled ICBC Global Total Return Bond Fund, managed by Michael Wang. Although the fund’s mandate is global, it is essentially China-focused. On 30 November, it held 87% of its assets in Chinese and Hong Kong bonds, according to the fund’s factsheet.
Top 10 fixed income funds in 2017 (Hong Kong)
| Fund | Category | 1-year Return |
| ICBC Global Total Return | Global Bonds | 31.82% |
| AB Sicav I Euro High Yield Portfolio * | European High Yield | 21.44% |
| UBS (Lux) Bond Euro High Yield * | European High Yield | 21.34% |
| Fidelity European High Yield * | European High Yield | 20.96% |
| Threadneedle (Lux) Emerging Market Corporate Bonds | Emerging Market Bonds | 20.92% |
| Robeco European High Yield Bonds * | European High Yield | 20.13% |
| Robeco High Yield Bonds | Global High Yield | 20.10% |
| Legg Mason Western Asset Euro High Yield * | European High Yield | 19.91% |
| Neuberger Berman Emerging Market Debt Blend * | Emerging Market Bonds | 19.90% |
| HSBC GIF Euro High Yield Bond * | European High Yield | 19.79% |
Data: FE, Returns in US dollars, as of 31 December 2017
* Funds available in Hong Kong and Singapore
While the top-ten list is dominated by European high yield bond funds, the list of worst performers contains many US dollar bond funds. A Hong Kong-based industry expert at a French wealth management firm believes the underperformance is a result of two factors: The weakness of the US dollar and spread tightening of European hybrid financial and high yield bonds.
“The US dollar index fell about 9% in 2017 while the euro rose from 1.05 to 1.20,” he noted.
The worst performer was the renminbi-denominated Bosera Income Opportunities Fund, which invests in high-yield bonds globally, with up to 20% of the fund’s assets in Chinese debt.
Bottom 10 fixed income funds in 2017 (Hong Kong)
| Fund | Category | 1-year Return |
| Bosera Global Income Opportunities | Global Bonds | -2.34% |
| Investec Target Return Bond * | Global Bonds | -0.94% |
| Alliance Bernstein Global Bond Portfolio * | US Dollar Bonds | -0.83% |
| Legg Mason Western Asset US Short-Term Government * |
US Dollar Bonds
|
-0.77% |
| Legg Mason Western Asset US Adjustable Rate * | US Dollar Bonds | -0.17% |
| MFS Meridian Limited Maturity * | US Dollar Bonds | -0.09% |
| GF China RMB Fixed Income | China RMB Bonds | 0.19% |
| Franklin US Government * | US Dollar Bonds | 0.19% |
| Blackrock GF US Government Mortgage * | US Dollar Bonds | 0.28% |
| BOC-Prudential Hong Kong Dollar Bond | Hong Kong Dollar Bonds | 0.33% |
