Kuala Lumpur-based Affin Hwang Asset Management has launched the Affin Hwang World Series – Asian High Yield Fund, according to the statement from the firm.
The new offering is a feeder income fund that invests at least 80% of its assets into HSBC Global Asset Management’s HIFT Asian High Yield Bond Fund, which is domiciled in Hong Kong.
This is the first Asian high yield strategy that the firm will be offering to its clients, according to an Affin Hwang AM spokesman. The firm has another high yield feeder product, but is focused on the US market and feeds into the Allianz US Short Duration High Income Bond Fund.
“Against a historically low interest rate environment, the [Asian High Yield Fund] provides an optimal solution for investors today in their search for yield,” Chan Ai Mei, chief marketing and distribution office at Affin Hwang AM, said in the statement.
According to Geoff Lunt, director for fixed income at HSBC AM, yields of Asian high yield bonds are at around 7.5%, the statement said.
In terms of credit risk, Lunt expects that default rates for the asset class are expected to be lower than other regions, anchored by strong fundamentals of Asian high yield issuers that are more equipped to weather economic headwinds.
“The default rate of the Asian high yield bond market is expected to be 4% for 2020, which is lower than other global markets. One of the favourable factors is the lower exposure that Asian credit has to the energy sector,” Lint said.
HSBC Malaysia, which will distribute the fund, is also optimistic about the opportunities presented in the asset class.
“The Asian high yield bond universe comprises of at least 10 different major Asian markets with different fundamentals and performance drivers,” Jon Chivers, head of wealth, wealth and personal banking at HSBC Malaysia, said.
“This, together with strong local investor base, render the Asian high yield bonds less vulnerability to movements in market sentiment and exhibit low correlation to other asset classes.”
The fund is available only to sophisticated investors in Malaysia, which include high net worth individuals. HSBC Malaysia is the exclusive bank distributor of the fund for three months, according to the Affin Hwang AM spokesman, noting that asset manager plans to expand the distribution to other banks after the three-month period.
The product is also the second feeder fund that Affin Hwang has launched with HSBC Global AM, the first being the Affin Hwang World Series – US Dollar Liquidity Fund, which was rolled out in February and feeds into HSBC Global AM’s US Dollar Liquidity Fund, the spokesman said.
