Malaysian investors have continued to pour money into fixed income products this year, according to Kuala Lumpur-based Affin Hwang Asset Management.
Year-to-date ending 20 February, the firm has raised at least RM 1.63bn ($380m) across its fixed income products, according to a statement from the firm.
The bulk of the inflows came from a domestic fixed income fund, the Affin Hwang Select Bond Fund, which attracted RM 161m, a Kuala Lumpur-based spokesman said.
Fixed income, often viewed as a defensive asset class, is seeing inflows as coronavirus headlines roil global markets.
As of the end of January, fixed income products sold in Malaysia had net inflows of $1.18bn, while equity products had net outflows of $1bn, according to latest data from Morningstar Direct.
“We advise investors not to be perturbed with any short-term impact the coronavirus might have on financial markets. With more decisive measures and effective control policies by governments in containing the outbreak, we view that the global economic recovery risks being delayed rather than derailed,” Chan Ai Mei, the firm’s chief marketing and distribution officer, said in the statement.
JP Morgan’s income fund popularity
Separately, the firm singled out its Global High Income Fund as one of its products that attracted sizable assets.
According to the spokesman, the fund had net inflows of RM 65.8m since its launch in mid-January. The fund, which is only available to qualified investors, is a white-labelled version of JP Morgan’s Income Fund. The Income Fund invests in global fixed income securities and aims to provide investors with a consistent monthly payout at a targeted distribution yield between 5-6% per annum.
“The recent launch of the Affin Hwang World Series – Global High Income Fund is timely as it presents a suitable low-risk alternative to achieve higher income in a low interest environment,” Sammeer Sharma, head of wealth management at Standard Chartered Bank in Malaysia, said in the statement.
Standard Chartered was the first bank distributor of the fund. Affin Hwang has since included UOB as a distributor, according to the statement.
“As one of the core staple multi-income solutions in our model income portfolio, it can help savers mitigate the reduced interest on their savings brought on by rate cuts,” Sharma said.
The JP Morgan product was also popular among Thailand investors. In January, TMBAM Eastspring launched a feeder fund investing into the JP Morgan product and was able to raise THB 6bn ($188m) during its initial public offering.
The JP Morgan Income Fund versus its benchmark
Income attraction
Affin Hwang also noted that some of its other income products also attracted money.
“Investors continue to seek income-based solutions to diversify their portfolios against heightened volatility in markets,” Affin Hwang’s Chan said.
In 2019, products that provide regular income streams were among the most popular funds in Malaysia, according to Morningstar Direct. The RHB Asian Income Fund, a mixed-asset feeder fund product that invests in Schroders’ Asian Income Fund, had the highest net inflows among all funds during the year with RM 1bn ($230m) in net new money, followed by Affin Hwang’s Aiiman Income Plus Fund (RM 930m).
“The [income theme in Malaysia] will most likely continue in 2020. Multi-asset, especially with an income theme, and bond funds, will continue to see inflows due to low investor sentiment,” Jaslyn Ong, Singapore-based analyst at Cerulli Associates, said previously.
