The Amundi Global Fixed Maturity Bond Fund Sept 2024 was launched to accredited investors in Singapore and Malaysia last month, according to a person familiar with the issuance.
The product, which will distribute payments quarterly, collected $85m during its initial offering period, which has now closed, and Maybank was the distributor, the person told FSA.
Investment grade bonds account for at least 60% of the portfolio, which has a 40% cap on high yield bonds, according to the FMP’s factsheet.
The largest geographic exposure is China (14.9%), followed by supranationals (13%) and the US (9%). The top three sectors are banks (25%), diversified financial service (23.6%), and real estate (16.7%), the factsheet shows.
Amundi has one other existing FMP available to accredited investors in Singapore, which is also has a global fixed income mandate and 2024 maturity date, according to Monetary Authority of Singapore (MAS) records.
In addition, the firm offers Singapore retail investors its Global Emerging Fixed Maturity Bond Fund, MAS records show.
In Hong Kong, Amundi only has one FMP available for retail investors, the Asian Bond Fixed Maturity Fund 2023 which received approval from the Securities and Futures Commission (SFC) in March this year, according to the regulator’s records.
Globally, the firm manages around 180 FMPs with combined AUM of €320bn ($375bn), according to the factsheet.
FMPs in Asia
FMPs gained popularity among global investors last year on expectations of falling US interest rates and bond yields, precipitating a search for products that could generate a reliable source of income for a specified time period.
However, the FMP bandwagon has faced headwinds this year as a result of the coronavirus induced economic slowdown.
The biggest concern for investors is the prospect of a pick-up in corporate bond defaults. A global recession, poor market liquidity and surging borrowing costs might threaten corporate solvency and cash flow.
Some managers and distributors are also anxious that the prolonged low-interest-environment will put pressure on FMPs’ returns, while the uncertainty from Covid-19 could potentially restrict fundraising for new FMP launches.
“There could be concerns that these products might fetch lower yields this year compared to last year,” Shannen Wong, co-author of Cerulli Associates’ September Asian Monthly Products Trends Edge said previously.
Nevertheless, although the pace of issuance has not been so frenetic this year, and product sizes less substantial, several fund houses have gone ahead with FMP launches this year, including Invesco, EFGAM, Aberdeen Standard, and Fubon, FSA previously reported.
FMPs typically deploy a “buy and maintain” approach to avoid re-investment risk, and aim to provide future cash flow security, offer low volatility and mitigate interest rate risk. But income, returns and capital are typically neither guaranteed nor protected.
In Asia, fund distributors favour FMPs, because they have short, fixed tenures, and investors can typically get back their principal plus all income distributions, according to a recent Cerulli Associates, a Boston-based consultancy.