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Invesco to launch bond fund in Hong Kong

The firm is betting that the fiscal stimulus provided by central banks will support investment grade corporate bonds.

The Invesco Global Investment Grade Corporate Bond Fund received approval for sale to retail investors from the Securities and Futures Commission last week, according to the regulator’s website.

The Luxembourg-domiciled fund was originally launched in 2009 and is currently available in European countries as well as in Singapore for accredited investors, according to FE Fundinfo.

The fund is co-managed by Luke Greenwood and Lyndon Man and follows a themed-based approach, seeking out relative value opportunities across global corporate bond markets, according to the factsheet.

Assets are mostly BBB-rated bonds (61.2%), followed by A-rated bonds (22.5%).

The largest geographic exposure is the US (25.8%) and the highest sector allocation is financials (42%), followed by industrial (35.3%), the factsheet shows.

“We hold a preference for financial bonds versus non-financial bonds,” the managers commented in the factsheet. “On a regional basis, we believe that Europe and Asia are attractive from a fundamental perspective, relative to the US.”

Fiscal stimulus

The US has been one of the countries that has been hit hard by the coronavirus outbreak, increasing concerns about the impact the pandemic has on credit markets.

However, aggressive action by the US Federal Reserve – $3trn in loans and asset purchases –  as well as intervention by central banks globally are expected to provide strong support for fixed income.

“Looking forward, the base case remains that the global macro backdrop, low growth, low inflation, and easy monetary policy should continue to be conducive for high credit quality corporate bonds and that combined with attractive valuations, should result in the asset class remaining relatively well supported during 2020.”

However, interest rates are expected to remain near zero for years.

Invesco has 69 SFC-authorised funds in Hong Kong. In Singapore, it manages 95 products for accredited investors and four for retail investors, according to FE Fundinfo.

The firm managed $1.05trn of assets as of the end of March.

FSA contacted the firm for more information but it was unable to reply in time for publication.

The Invesco Global Investment Grade Corporate Bond Fund vs category average and benchmark

Source: FE Fundinfo. In US dollars, three-year cumulative performance.

Part of the Mark Allen Group.