Manulife Asset Management Singapore has launched the Manulife SGD Income Fund, which aims to deliver income and returns in Singapore Dollars from Asian fixed income investment opportunities.
The fund aims to deliver higher stability and lower risk, with an emphasis on income, Manulife said in a statement announcing the launch. It will be available to retail and high net worth investors and is also available via Standard Chartered and DBS banks in Singapore. It is also available to institutional investors.
The fund is structured to invest in companies that “consistently distribute coupon interest”, with returns potential expected to be realised from the allocation between interest rate strategies and credit positioning, the company said.
The fund invests mainly in Asian investment-grade bonds, with the flexibility to invest up to 30% of its Net Asset Value in non-investment-grade bonds for potential higher returns.
Murray Collis, head of fixed income, Singapore at Manulife Asset Management, said that many investors in Singapore have been “chasing yields” and some have recently encountered defaults from corporate bond issuers, particularly in the high-yield, oil, gas and shipping segments.
‘Credit risk uncertianty’
“Credit risk is a key uncertainty for bond investors, which is why this fund is focusing on high quality credit, with at least 70% of the portfolio allocated to investment-grade bonds,” he said.
Manulife believes that Asian economic fundamentals are expected to remain stronger than other emerging markets in the year ahead. Over the past 10 years, a rating upgrade trend was seen for most Asian countries to achieve investment grade status. Countries in the region have also seen stable economic growth, stronger balance sheets and are in a better macroeconomic position than in the previous years, its statement added.
Wendy Lim, chief executive, Singapore at Manulife Asset Management, added that many investors are facing a more challenging investment environment with “modest growth prospects, greater uncertainty and volatility” while they are increasingly looking for regular income.
“Despite considerable global uncertainty and looming US rate hikes, the long-term fundamentals for Asian fixed income remain in place,” said Lim. “We are pleased to offer this Fund which captures regional investment opportunities in SGD terms that minimises foreign currency exposure, offering regular SGD income and returns.”
The fund is managed in SGD with a focus on SGD denominated bonds. With at least 50% of the portfolio being SGD-denominated and non-SGD positions being hedged back to SGD, so that it offers single currency exposure.
Manulife Asset Management has more than 60 fixed income experts and over 20 credit analysts working out of 10 Asian investment offices, covering more than 500 Asian credit issuers (as of 31 December 2016). In Asia, Manulife Asset Management manages approximately US$40bn in fixed income assets (as at 31 December 2016).