HEAD-TO-HEAD: HSBC vs Fidelity

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Pictured: Luke Ng, senior VP of research at FE Advisory Asia

Asian investors have shown preference for fixed income funds over equity funds.

For example, in Hong Kong, assets of fixed income funds rose by 5% to $438.2bn for the full year 2016, while equity fund assets were down by 2.8%, according to SFC data.

Hong Kong’s fund industry resembles what is happening in the region as a whole. According to Morningstar data, fixed income funds that are for sale in Asia represented the biggest net inflows in 2016 – at around $46bn, while equity funds had the largest net outflows of around $53.3bn, as reported.

Among fixed income funds, high yield funds had some of the biggest capital inflows.

High yield bond funds were also the best performers in the fixed income universe in 2016.

On a one-year performance basis ending December 2016, three high yield bond funds were among the top five best performing funds, as reported. On a three-year basis ending the same period, Asian high yield bond products ranked high, with three funds making it to the top five.

Pheona Tsang, portfolio manager of the BEA Union Investment Asian Bond and Currency Fund, told FSA earlier that high yield funds are still preferred by investors.

They have lower interest rate sensitivity with a better cushion on credit spread than most other fixed income products, she said.

Given this backdrop, Luke Ng, senior VP of research at FE Advisory Asia, provides a comparative analysis of two Asian high yield products, the HSBC Asian High Yield Bond Fund and the Fidelity Asian High Yield Fund.

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