BOCHK AM bond fund targets risk-averse investors

Asset Class in Focus

Amid the current cycle of rate hikes plus market uncertainty, BOCHK Asset Management has launched an ‘all-weather’ bond fund in Hong Kong.

Hong Kong’s Securities and Futures Commission (SFC) approved the firm’s All Weather Short Term Bond Fund on 16 August, and it has been trading from 14 September.

The portfolio invests primarily in investment-grade fixed income securities with a duration not exceeding 1.5 years; the current fund duration is roughly three months.

The underlying holdings are either renminbi-denominated bonds or US dollar offshore bonds. Apart from traditional bond securities, the fund can also allocate to different income vehicles, such as convertible bonds, contingent convertible bonds and money market instruments.

Shen Hua, chief executive officer at BOCHK Asset Management, said at a launch event that the fund is positioned as a stable income product for investors to park their money during a relatively volatile period in markets. Investing in short-term securities helps investors more closely track the movement of the rate environment, he explained.

The asset manager expects an approximate 2.6% in annualised returns, but the fund does not pay dividends to investors.

The minimum investment threshold is $1,000, with ongoing fees of 1.1%, according to the offering document submitted to the SFC.

The average fee for global bond funds sold in Hong Kong is 1.31%, according to FE Analytics.

Global fixed income funds for sale in Hong Kong returned 4.49% trailing three years, FE data shows. The best performer was the Capital Group Global High Income Opportunities (Lux), generating a return of 23.77% in US dollar terms; the worst performer was Bosera Global Income Opportunities Fund, returning -11.18%.

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