Posted inNews

EFGAM to launch FMP in Hong Kong

Very high market volatility and falling interest rates are creating an attractive environment for fixed maturity products.

EFG Asset Management has received approval from the Securities and Futures Commission (SFC) for the New Capital Wealthy Nations Fixed Maturity Bond Fund 2024, which permits sale to retail investors in Hong Kong, according to the regulator’s website.

The fund is a newly-incepted product, according to FE Fundinfo.

Further information was requested from EFGAM, but the firm said it could not respond in time for publication.

Fixed maturity products (FMPs) are expected to appeal to investors who want more certainty in terms of future income streams and interest rate risk, especially when global markets are experiencing huge volatility.

FMPs promise regular income for a specific time period. Compared to direct investment in a few bonds by individual investors, a fixed-maturity bond fund brings in benefits of diversification with a large pool of bond positions across different markets and industries.

They still carry risk, but unlike a regular bond fund, all principal is typically returned at maturity (if no defaults), plus investors receive income monthly or quarterly, as specified.

Several firms have been launching FMPs in Asia. The most recent Hong Kong approvals, last December, were the Invesco Asian Bond Fixed Maturity Fund 2022 – II  and the Hang Seng Global Bond Fixed Maturity Fund 2022 (II) , according to SFC records.

In 2019, Hang Seng introduced about 12 portfolios that only contained fixed maturity products and the bank plans to roll out more this year, FSA reported earlier.

Wealthy Nations series

EFGAM’s new FMP belongs to the firm’s “wealthy nations” series. Another product in the series is the SFC-registered Wealthy Nations Bond Fund, which has outpaced the sector over three years (chart below).

According to the firm, its wealthy nations approach involves screening for foreign asset opportunities by “taking the net debt position for each country and dividing it by GDP. We then reorder countries according to this screen and avoid those with assets less than -50% of their GDP.

“This helps to looks past situations in certain countries where the financial system is over-leveraged, for example, but the sovereign debt to GDP is low.

“These risks within the economy are important but are often overlooked by ratings agencies.”

EFGAM in total manages five products for retail investors in Hong Kong, FE Fundinfo shows.


The New Capital Wealthy Nations Bond Fund vs category average

Source: FE Fundinfo. In US dollars, three-year cumulative performance. Note: the benchmark ICE BofAML Eurodollar Index is not available in FE Fundinfo.

Part of the Mark Allen Group.