High yield bond funds invested in Chinese property and Asian high yield issuers are among the best performing high yield fund strategies year-to-date, according to data compiled by FSA.
After lagging US high yield strategies last year, Asian high yield funds are topping the performance tables year-to-date among those registered for distribution in Hong Kong and Singapore*.
Below are the top-10 performing high yield bond strategies year-to-date, according to data from FE fundinfo.
| Fund | YTD return (%) | 2023 return (%) |
| Premia China USD Property Bond ETF | 12.03 | -51.56 |
| Nomura Asia High Yield Bond | 9.36 | 2.28 |
| Value Partners Greater China High Yield Income | 8.92 | 3.82 |
| FF China High Yield | 8.70 | -8.59 |
| BlackRock GF Asian High Yield Bond | 8.41 | -3.18 |
| Value Partners Greater China High Yield Bond | 7.95 | 0.67 |
| UBS (Lux) Bond SICAV Asian High Yield | 7.92 | -0.57 |
| Eastspring Inv Asian High Yield Bond | 7.63 | 3.02 |
| LO Asia Diversified High Yield Bond | 7.61 | 9.62 |
| ishares USD Asia High Yield Bond ETF | 7.50 | 4.33 |
The Premia China USD Property Bond exchange-traded-fund (ETF) was the top performer year-to-date, up 12% after a 51.56% decline in 2023.
This comes as China’s government plans to buy millions of unsold homes to try to clear its growing housing inventory, according to news reported by Bloomberg.
It is hoped the measures will provide crucial cash-flow to Chinese property developers who are still struggling amid the nation’s prolonged property market downturn.
After the default of Evergrande, formerly the country’s largest property developer, other property developers are still dealing with liquidity issues.
But despite a prolonged decline, Chinese property bonds that once dominated the Asian high yield bond market still account for a notable portion of existing high yield bond issuers.
As such, seven out of the top-10 performing strategies across the world were Asian high yield funds. A standout performer was Lombard Odier’s LO Asia Diversified High Yield Bond fund which delivered a strong 2023 return unlike many of the others in the table.
Asian high yield bond performance has been aided by relatively high headline yields, changing US interest rate expectations and the prospect of a long-awaited recovery in the broader Asian economies.
The $1bn iShares USD Asia High Yield Bond ETF for example has a weighted average yield to maturity of 8.84%.
Asian high yield bond prices have also recently benefited from the volatility caused by rapidly evolving US interest rate expectations which has caused bonds to rally on the back of renewed anticipation for rate cuts.
The latest US CPI figures showed that core inflation in the world’s largest economy slowed to its lowest in three years, potentially giving the US Federal Reserve a green light to move forward with interest rate cuts.
Additionally, following strong earnings season from Asian companies and a Japanese economy seemingly emerging from decades of deflation, the economic fundamentals in the Asia region appear to be improving.
*Returns were measured in US dollar terms. The data only includes funds available to Singapore and/or Hong Kong investors based on the fixed income sectors classified by FE fundinfo. This is not an exhaustive list of all the top-performing strategies.
