Around 81.8% of managers operating in Hong Kong surveyed by Cerulli indicated that they will be promoting Asia fixed income strategies to distributors over the next two years.
Although Asia fixed income products sold in Hong Kong had net redemptions of $1.89bn during the first quarter, there are signs that sentiment over the asset class is improving, according to data from the Hong Kong Investment Funds Association (HKIFA).
After the first quarter, Asia fixed income strategies had the second highest net inflows among all fund categories in April and May, with a combined monthly net inflow of $520m, HKIFA data shows. Global fixed income funds had the highest net inflows among all fund products, attracting $600m during the same period.
“Against a backdrop of a low yield environment, Asian fixed income was featured on top because of their better yield,” Leena Dagade, associate director at Cerulli Associates, told FSA.
“Demand for fixed-income products, especially global and Asian fixed income, is expected to continue to hold up in most markets this year due to the uncertainty brought by the coronavirus outbreak,” the report added.
Other opportunities
Fund managers in Hong Kong are also keen on promoting other products besides Asia fixed income, according to the report. For example, 72.7% of them indicated that they will also be promoting Asia-Pacific (ex-Japan) equities, China equities, Asian high yield, global multi-asset and ESG strategies.
“Despite the potential demand for fixed income, asset managers in Hong Kong, Singapore, Taiwan, India and Korea surveyed by Cerulli named equity strategies as the top broad strategies that they would like to promote to distributors this year,” it said.
Degade also expects that multi-asset products will continue to be in demand in Hong Kong.
“In the current market environment, investors are likely to look for low-risk products or multi-asset products that can diversify risks and provide income,” she said.
“Just like other markets, Hong Kong investors do look for regular income. As investors navigate the coronavirus-triggered uncertainty, capital protection, reducing downside risks and ensuring steady income will likely be on top of minds,” she said.
According to data from HKIFA, multi-asset products had net inflows of $406.4m during the first five months this year, with global multi-asset funds accounting for $165.46 of the inflows.
