abrdn has announced the launch of its Short-Dated Enhanced Income (SDEI) strategy, which aims to offer income and stability to investors given the current difficult macro backdrop.
The strategy is available to retail and institutional or accredited investors in Singapore, while it is only available to professional investors in Hong Kong.
A global fixed income solution, the strategy targets an average ‘A-‘ rating and low duration bonds of one and two years.
Among most asset allocators at the moment, long duration is the consensus given its tendency to outperform at this stage of the rate hiking cycle historically.
abrdn notes though that investors are currently not being paid adequately to hold longer maturity bonds, while shorter maturity bonds benefit from a better liquidity profile.
“Investors seek attractive yet stable income in the current environment. SDEI offers exactly that: a compelling yield combined with low credit and duration risk. We capture attractive yields on short-dated government bonds and seek to enhance the strategy by introducing best ideas across developed and emerging corporate bond markets. This positions SDEI as an attractive alternative to holding cash while benefiting from fixed income growth opportunities,” said Thomas Drissner, head of Asian credit research.
“Generating robust income through short-dated corporate bonds can be a relevant and attractive strategy during most stages of the economic cycle. Right now, however, there is an even stronger case for increased allocations to short-dated bonds due to the significantly increased absolute level of yields, coupled with yield curve inversion. Against this backdrop, our SDEI strategy is well positioned to deliver a unique set of outcomes for investors,” said Mark Munro, investment director.