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Investec plans EM fund launch in Hong Kong

The asset manager has SFC approval to introduce an emerging market bond fund.

The Emerging Markets Investment Grade Corporate Debt Fund yesterday received approval from the Securities and Futures Commission (SFC). Once launched, it will be available for sale to retail investors in Hong Kong, the regulator’s record shows.

The Luxembourg-domiciled fund was originally launched in November last year and has amassed assets of $152.1m as of 22 January, according to FE Fundinfo.

“The fund invests primarily in a range of bonds issued by emerging market companies and in related derivatives while at least 90% of the bonds invested in are of investment grade,” the factsheet noted.

The top two sectors are investment grade corporate (77.5%) and emerging market hard currency debt (12.5%). The major geographic exposure is China (offshore and/or mainland) which accounts for 20.9%, followed by Mexico (18.7%) and Brazil (10.1%), according to the factsheet.

Acting as the fund manager, Victoria Harling joined Investec Asset Management in 2011 from Nomura International and she is responsible for emerging markets corporate debt, the factsheet noted.

FE Fundinfo shows that the product has been available for sale in Luxembourg.

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

Established in 1991, Investec AM managed $148.9bn as of the end of September 2019, according to the firm’s website.

EM bonds preference

Other fund houses like Aberdeen Standard Investments (ASI) also expressed preference for emerging market bonds.

“Emerging market bonds should be part of the investment mainstream, but as yet they are not,” Mark Baker, investment director, emerging market debt at ASI, said recently.

“We expect the growth differential between emerging market and developed markets to widen in 2020, driven by economic recovery in a handful of the larger emerging economies. This dynamic is typically a bullish signal for emerging market assets, especially currencies.

“Valuations for US dollar-denominated bonds still look attractive compared with developed market assets and investors remain structurally underweight the asset class,” Baker added.

Moreover, Ben Powell, chief investment strategist for Asia-Pacific at the Blackrock Investment Institute, said previously that he was overweight high yielding US dollar-denominated Latin America bonds and Asia local currency debt, including China and Indonesia.

“There is little likelihood of interest rate hikes, so the implication is that access to income streams will be crucial for investors in a slow-growth, low-rate world, which should favour emerging market and high yield debt,” he added.


Part of the Mark Allen Group.