Attractive income potential in zero-interest-rate age
Attractive income potential in zero-interest-rate age
China is the second largest bond market globally. China's offshore bond market also offers investors enhanced diversification, liquidity, and broad investment opportunities with attractive yield.
1. Attractive yields
China high yield bonds offer relatively attractive yields and a positive fundamental outlook. Longer term, we hold a positive outlook on the China high yield sector with the continued accommodative stance of central bank policies and sound credit fundamentals.
Asset class | Asset class | Yield (%) | Yield (%) |
|---|---|---|---|
Asset class | China USD High Yield | Yield (%) | 14.6 |
Asset class | Asia High Yield | Yield (%) | 9.3 |
Asset class | USD High Yield | Yield (%) | 4.2 |
Asset class | EUR High Yield | Yield (%) | 3.6 |
2. Focus on total return, not just yield
The Fund focuses on attractive risk adjusted returns and total return, not just yield. Through active management, dynamic risk positioning, and diligent security selection, the Fund seeks to generate attractive total returns throughout market cycles.
3. Attractive entry opportunity
Current China high yield spread levels are trading close to historic peaks since 2005 with a percentile rank of 92%1. The only periods when spreads traded wider than they are currently at, are during the 2008 Global Financial Crisis and the 2011 Sovereign Debt Crisis. We see an attractive entry point for China high yield to capture the spread compression opportunity relative to other opportunities in fixed income, whilst being cognizant of the risks of this asset class.
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