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Eastspring foresees income-hungry investors

With interest rates near zero, the firm joins rivals in betting a Reits- and high yield-heavy strategy will appeal to income-hunting investors.

Eastspring Investments, the Asian asset management business of Prudential, said yesterday that it was distributing the Asia Real Estate Multi Asset Income strategy with a regional distributor in Singapore and Hong Kong, according to a statement from the firm.

The Luxembourg-domiciled product was originally launched in December 2019, according to FE Fundinfo.

“The product is available for retail and professional investors in both Singapore and Hong Kong,” a spokeswoman for the firm told FSA.

The fund is managed by Joanna Ong, Pearly Yap and Li Ping Yeo and the promise is to distribute monthly. “Currently, the target payout is 5-6% and this will be reviewed in June,” she added.

The multi asset approach allocates to equities, high yield bonds, infrastructure and investment grade bonds, the statement said. Geographic focus is Asia-Pacific ex-Japan with a heavy emphasis (35%) on China.

As of end March, Reits accounted for 23.8% of the portfolio and high risk bonds (B and BB rated) accounted for about 34%, the factsheet shows.

“With global interest rates likely to remain low, the search for higher yields will continue to drive capital to real estate,” Xavier Meyer, head of distribution, said in the statement.

Joanna Ong, portfolio manager, added that she believes Asian real estate “has typically delivered higher income than other Asian asset classes, and the region offers attractive, varied and unique real estate investment opportunities, driven by long-term structural trends such as urbanization, population growth and the increasing wealth demographics of Asia”.

The firm said the impact of Covid-19 may have lasting ramifications on the Asian real estate sector. “While retail and hospitality businesses have been hit, logistics and warehousing businesses may benefit.”

Eastspring managed assets of around $241bn as of the end of 2019, according to the statement.

Reits bandwagon

Eastspring joins rivals who have already prepared income-focused products that invest in Reits in Asia.

Schroders recently lodged an application with the Monetary Authority of Singapore to launch the Asia More+ Fund last month.

According to MAS records, the product is still awaiting for approval.

In February, Allianz Global Investors also filed with the MAS to roll out the Allianz SGD Income Plus Fund, which invests in fixed income securities and Reits. MAS record shows that the fund has received approval from the regulator.

Aviva Investors in August last year launched the Sustainable Income and Growth Fund, which also invests in Reits, and aims to earn income, targeted at 5% annually, FSA previously reported.

Part of the Bonhill Group.