Aberdeen Standard Investments (ASI) has launched Luxembourg-domiciled Aberdeen Global – China Onshore Bond fund. The fund will be managed by ASI’s Asian fixed income team, which forms an integral part of the wider emerging market debt team.
The fund will primarily invest in liquid government securities and highly rated/high quality policy bank, quasi sovereign and investment grade corporate bonds in the mainland Chinese bond market, issued in onshore Renminbi (CNY). The primary investment strategies deployed will be interest rate (duration/curve) with some credit strategies.
Chinese bonds bring diversity to portfolios, relatively attractive yields compared to other comparable economies and the independence of Chinese policymakers means that the bond market is relatively less correlated to other bond markets globally.
This low correlation makes investing in the China market particularly attractive in a rising interest rate environment in other major markets. Despite recent volatility in emerging markets, local currency Chinese bonds have continued to deliver positive returns and have been one of the top performing global bond markets over the last year according to data from Bloomberg.
Aberdeen Standard Investments Adam McCabe, head of Asian Fixed Income, commented: “The Chinese economy is the world’s second largest behind the US. However, it is still developing, with a very different growth path to that of mature G10 countries. The yields and diversification benefits are attractive, but a thorough investment process is vital. Our insight and awareness backed by our rigorous global investment process will help us navigate around the challenges that will emerge from time to time.”
The launch is the latest stage in ASI’s growing commitment to the Chinese market. It follows the registration of ASI’s wholly foreign-owned enterprise (WFOE), Aberdeen Standard Asset Management (Shanghai) as a private securities investment fund manager with the Asset Management Association of China (AMAC) at the end of 2017.
In May 2018 ASI launched its first onshore private fund in China and successfully completed its initial fund offering to eligible domestic investors. In addition to its asset management business in China, since 2003 Standard Life Aberdeen plc has had a 50/50 joint venture insurance business, Heng An Standard Life (HASL).
The fund will initially be registered for sale in Luxembourg and Italy, with the intention of further registration in Belgium, Denmark, France, Germany, Netherlands, Spain, and Switzerland. The annual management charges for each share class are Institutional: 0.35% and retail (unbundled).