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Malaysian firm partners with Alliance Bernstein

RHB AM expects that it will be able to attract RM 100m ($23.7m) for its US-focused income fund in the next couple of months.
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The Kuala Lumpur-based asset manager has partnered with Alliance Bernstein (AB) to roll out the RHB American Income Fund, according to a statement from the firm.

The product is a white-labelled version of AB’s American Income Portfolio. The AB fund, which has $28.8bn in assets, invests a majority of its assets in US fixed income instruments and limits the exposure to below investment-grade rated bonds to 50% and avoids CCC-rated issuers, according to the fund factsheet.

The AB American Income Portfolio

Source: Fund factsheet. As of 31 January 2020.

This is RHB AM’s first feeder fund that invests in an AB fund. In total, the firm manages at least 17 feeder funds, which include target funds managed by Singapore-based UOB Asset Management, Schroders, JP Morgan Asset Management, Columbia Threadneedle, Blackrock and Goldman Sachs Asset Management, according to the firm’s website.

RHB AM is the fourth largest fund management firm in Malaysia, with assets of $6.85bn, according to data from Morningstar Direct. For the past one year ending-January, it is the third manager that attracted the most money, with $2.6bn in net inflows.

The RM 100m target

RHB AM’s new fund aims to provide quarterly income distribution, according to Eliza Ong, managing director and CEO.

“We believe that a US fixed income portfolio provides investors with the necessary income stability as well as potential for capital appreciation in light of the slowdown in global growth, which is also expected to remain slow for the near-to-medium term,” she said in the statement, adding that investors globally are expected to have a risk-off sentiment in light of the Covid-19 outbreak.

The launch of the fund comes at a time when global equity markets were rattled late-last month as investors panicked over the spread of the Covid-19 virus. Since then, fixed income funds have comprised the top-performing sectors among all funds available to Hong Kong retail investors, with US fixed income products being the fifth-best performing category (1.46%), according to data from FE Fundinfo.

Year-to-date, funds invested in US bonds have enjoyed the best returns (3.24%).

Ong also expects that the fund will attract RM 100m in assets “in the next couple of months”.

Products that provide regular income streams, including fixed income and mixed-asset portfolios, have become popular in Malaysia. In 2019, five of the top 10 products that had the highest net inflows were income funds, according to data from Morningstar Direct.

During that time, RHB AM’s Asian Income Fund, a mixed-asset feeder fund that invests in Schroders’ Asian Income Fund, had the highest net inflows among all funds with $1bn in net new money. The product continues to be the most popular fund this year, with $107m in net inflows in January, according to latest data from Morningstar.

Another firm has also taken advantage of the income theme popularity. In mid-January, Affin Hwang Asset Management launched the Global High Income Fund, which is a white-labelled version of JP Morgan’s Income Fund. Since its launch, the fund has attracted RM 65.8m, according to an Affin Hwang spokesman.

Part of the Mark Allen Group.