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Capital Group to launch US bond fund in Asia

Despite expectations of rising US interest rates, Capital Group intends to launch a bond strategy in Asia that targets investment grade US corporates.

The Luxembourg-domiciled Ucits product focuses on investment-grade US corporate bonds, according to a statement from the firm.

“For many Asian investors facing the challenge of low yield in domestic bond markets, US investment-grade corporate bonds offer an attractive way to access higher yield without significant risk exposure,” Eric Delomier, Capital Group’s investment specialist, said in the statement.

According to him, US corporates have typically fared well even in periods of gradual interest rate rises coming from the Fed.

The launch is scheduled for 21 March in Singapore, with later dates planned for Hong Kong and Korea, the firm said. 

The fund was previously only available to US investors, and is the fourth US investment strategy to be introduced by the firm to Asian investors, the statement said. The fund will also be launched in Europe.

Previously in Asia, the firm rolled out the New Perspective Fund in October 2015, the Investment Company of America in June 2016 and the New World Fund in October 2016.

The statement said that the products, which are also Luxembourg- domiciled funds, have gathered around $1bn of assets from Asian investors.

US-based Capital Group manages around $1.4trn in client assets.

Part of the Mark Allen Group.