How Pictet Asset Management Is Opening the Door to Asian Bonds
When it comes to prime investment opportunities, Asia is where it is happening right now. Take China, for example. The country currently boasts the world’s second largest economy based on GDP and is well poised to take pole position in the near future. China’s actual GDP Annual Growth Rate currently stands at 6.8%, and has enjoyed continuous growth for decades.
China has only just begun lifting restrictions on foreign investment, meaning whole swathes of new opportunities are starting to open up for global investors looking for strong returns.
(Image source: tradingeconomics.com)
Asia as a whole is forecast to remain the world’s fastest growing region until at least 2030, with Japan, South Korea, Indonesia, and India all showing great strength alongside China.
Pictet Asset Management
One of the leading organizations helping long-term investors identify the most attractive investment opportunities in the region is Pictet Asset Management.
Part of The Picet Group, Pictet Asset Management was among the pioneers in both emerging debt and emerging equity investing. Building on equities and hard currency debt, the firm has expanded its offering to include local currency debt, and, more recently, Asia-specific and corporate debt strategies as emerging markets have grown.
The firm is an independent asset manager, overseeing over USD 200 billion for clients across a range of equity, fixed income, alternative and multi-asset products. It provides specialist investment services through segregated accounts and investment funds to some of the world’s largest pension funds, financial institutions, sovereign wealth funds, intermediaries and their clients.
With growing economies, lower debt, and positive demographics, emerging markets are poised to overtake the developed world – and Pictet Asset Management is already perfectly placed to capitalize on the new opportunities these economies bring.
Providing a Gateway into Asia’s Corporate Bond Market
There is tremendous potential for investors to make substantial gains from Asia’s corporate bond market. Pictet Asset Management has identified what it believes are the highest credit quality opportunities in emerging markets and launched a fund that taps into them.
The new Asian Corporate Bond fund will seek revenue and capital growth by investing in diverse portfolios of bonds and debt securities which are issued and/or guaranteed by companies based in, or conducting the majority of their business in, Asian countries. These companies can be organized under either private or public law and will include public companies which are majority owned by the respective country’s state or local authorities. The Asian countries the fund will be focusing on will include (but are not limited to) Hong Kong, Singapore, the Philippines, Thailand, South Korea, Taiwan, Indonesia, India, China, Macau, Malaysia, and Bangladesh.
The fund, classified as Pictet-Asian Corporate Bonds-Z dm USD, is characterized with a risk rating of three, placing it just left of center on the seven-point risk consideration scale, and has no annual management fee, and a minimum investment amount of $0. The entry charge tops at 5%, and the exit charge and conversion charge are set at a maximum of 1% and 2% respectively.
The fund also invests in hard currency Asian investment-grade and high-yield corporate bonds, which offer attractive returns and low volatility. Investment choices will not be limited to any one sector of economic activity or currency, but, depending on the market conditions, it may transpire that it does narrow its focus in this manner. The fund will also be open to the possibility of investment of its net assets in emerging countries, again, depending on the market conditions of the time.
Pictet’s Head of Emerging Market Corporate Bonds, Alain Defise, has said, "Asia's economy enjoys robust growth, while the region's companies have some of the best credit ratings in the world. Investing in Asian corporate bonds should appeal to long-term investors who want to diversify their existing global emerging bond portfolio."
The UCITS compliant investment fund is domiciled in Luxembourg and benchmarked against the J.P. Morgan Asia Credit Diversified index. Its management team, which is led by Mr. Defise and based in London, Singapore and Hong Kong, uses a proprietary valuation and technical selection framework to identify investments that have the best risk return profile.