Attractive income solution riding on Asia’s growth

UBS Asian High Yield Fund

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Asia remains the key driver for global economic growth. With significant monetary and fiscal measures by central banks in Asia, particularly China, Asian high yield fundamentals are solid with attractive yield to offer.

1. Attractive return potential

The yields in credit markets offer attractive carry returns. The current spread and yield levels offer an attractive entry point into the Asian high yield market.

Asian USD Credit Market: Yields

Source: Bloomberg. As of end July 2020.

Bloomberg China Credit Impulse

(year-on-year % change)

Source: Bloomberg. As of end June 2020.

2. Supportive macro-trends in Asia

China’s credit impulse growth has been picking up. The Asia markets are supported by significant policy measures and more flexibility in monetary and fiscal policy.

3. Low exposure to commodities 

The Asian high yield universe has low exposure to commodity markets. The sector is under pressure from oil price volatility and movement lockdowns. Therefore, default rates in the Asian High Yield space are expected to remain low compared to broader emerging markets and US High Yield. China high yield bonds have shorter duration, so typically they are less sensitive to interest rate changes.

Comparatively stable income potential

>6% p.a.*

Yield distribution of UBS Asian High Yield Fund (USD) P-mdist 

Distribution Month

Distribution Month

Equivalent Yield (p.a.) *

Equivalent Yield (p.a.) *

Distribution Month

08/2020

Equivalent Yield (p.a.) *

6.4%

Distribution Month

07/2020

Equivalent Yield (p.a.) *

6.5%

Distribution Month

06/2020

Equivalent Yield (p.a.) *

6.9%

Distribution Month

05/2020

Equivalent Yield (p.a.) *

7.0%

Distribution Month

04/2020

Equivalent Yield (p.a.) *

6.1%

Distribution Month

03/2020

Equivalent Yield (p.a.) *

6.3%

Valuations in the Asian High Yield space look attractive as investors get a substantial yield pick-up with lower duration.

Ross Dilkes,
Portfolio Manager, UBS Asian High Yield Fund


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Important information

UBS (Lux) Bond SICAV – Asian High Yield (USD)