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Drawing income across regions, asset classes and private markets has the potential to improve risk-adjusted returns. Lucy Thomas explores how Asian investors can redraw the income map by looking beyond domestic markets.
Home bias is a well-documented tendency the world over, and Asia is no exception. Across a range of income-generating assets, allocations tend to cluster close to investors’ domestic markets.1
Portfolios anchored at home typically lean on a narrow set of risk and return drivers – i.e., the same rate cycle, currency and sectors or industries. Income drawn from more diverse sources, across other economies, rate cycles and credit conditions, can potentially improve the whole portfolio’s risk-return trade-off, because returns that are less correlated can do more work together than any single high yield does alone.
Asian investors are like any yield-hungry allocators in that they want cash flow, and increasingly that means finding it from more than one source. However, even when conviction points to going global, fear of complexity and currency risk can act as a barrier.
Home yield is real, but narrow
Dividends are an obvious place to start.
The FTSE ASEAN Index (which captures large- and mid-cap companies listed in Singapore, Malaysia, Indonesia, Thailand and the Philippines) delivered a 10-year average dividend yield of 3.57% to 31 December 2025.2 The trouble, therefore, is less the level of yield itself, but rather its composition. High-dividend indices across the region lean heavily on a narrow set of sectors such as financials, energy, property and telecommunications.
It is also important to distinguish between income generated by an investment and income paid out of capital. A high distribution is not necessarily evidence of stronger underlying returns: some funds may return part of investors’ capital to maintain a payout, potentially reducing the portfolio’s long-term growth. Asian equity dividends belong on the map as one region of a much broader whole, one that roams more freely into global territory.
Rethinking global fixed income
The clearest gap on many Asian income maps is in public fixed income. Evidence is not uniform across client types, but surveys and portfolio studies point to relatively limited allocations to global investment-grade credit and emerging-market hard-currency debt, with investors often holding only a few percent of the latter despite its diversification and income benefits.3
Indeed, EM investment-grade hard-currency debt can offer a spread over developed-market bonds, and it has proved more resilient than its reputation suggests: during the 2026 Middle East conflict, EM hard-currency sovereign and corporate credit traded in an orderly fashion and held up better than many investors expected.4 Asian and emerging-market credit have matured into broader, more differentiated opportunity sets, though this does not completely remove default, restructuring, liquidity or geopolitical risk.
Global and even European allocations are worth a look, too. Global high yield and European high yield can add yield pick-up from credit cycles that are often out of sync with Asia’s, though each should be judged on duration, spread and default risk rather than headline yield alone. Global and European investment-grade credit can play a different role; not a yield-for-yield replacement, but a deep, liquid, higher-quality core that – as with the higher-yielding counterparts – offer exposure to different issuers and rate cycles.
Alternative income sources
The fastest-growing region on the map is private markets. Asia-Pacific private credit alone is projected to expand from USD 59 billion in 2024 to USD 92 billion by 2027, a 16% compound annual rate, as banks retrench and mid-market companies look elsewhere for flexible capital.5 Moody’s expects global private-credit assets to pass USD 2 trillion in 2026 and approach USD 4 trillion by 2030, with Asia-Pacific among the areas gaining momentum.6
Real-estate debt is another key private-market income generator, lending against income-producing property, most conservatively on a senior, secured basis. Knight Frank estimates that Asia-Pacific accounted for only 5% of global private-credit fundraising by target amounts as of June 2025, but projects USD 90 billion-USD 110 billion of private-credit growth across Australia, Hong Kong, India and South Korea through 2028.7
Infrastructure debt sits alongside it as a long-duration yield anchor, financing energy, transport and digital assets with contracted, often inflation-linked cash flows. The opportunity is vast and structural, with PwC estimating that USD 151.1 trillion of investment is needed by 2050 to modernize digital infrastructure, clean energy and resilient transport, with Asia-Pacific accounting for more than half of global infrastructure over the next 25 years as urbanization and technological expansion drive growth in the transport, digital and power sectors.8
The opportunities are clearly meaningful but, ultimately, private markets work best as a complement to public income rather than a substitute, added in measured amounts with attention to sponsor quality and liquidity.
The limits of local
Flip the home-bias argument on its head, for a moment. In periods of uneven growth and shifting geopolitics, investors, carry concentration risk, with portfolios often tilted heavily toward a few domestic banks, a chunky slice of the AI trade, the telecommunications sector and/or a domestic property market.
Ultimately, the pressure for yield should push all investors to redesign their income portfolios. By recognizing the home bias and the concentration risks, they can build income as a system that spans assets and regions, rather than a collection of the highest local payouts.
Put another way, the map of Asian income needs to be redrawn.
1 Potential applications of U.S. equities for Asia-based investors, S&P Dow Jones Indices, 2023.
2 Hunting for dividends: is ASEAN next?, FTSE Russell/LSEG, 6 January 2026.
3 Strategic allocation to emerging markets, UBS Asset Management, 20 May 2026.
4 Ibid
5 Private Credit in Asia, Alternative Credit Council, Simmons & Simmons, EY and Broadridge, November 2025.
6 Private Credit Outlook 2026 executive summary, Moody’s Ratings, 21 January 2026.
7 Private credit’s growing role in Asia-Pacific real estate financing, Knight Frank, 6 October 2025.
8 Global Infrastructure Outlook, PwC. Estimates that USD 151.1 trillion of infrastructure investment is needed by 2050, with Asia-Pacific accounting for more than half of global infrastructure over the next 25 years.
Code: M-007474
