Nordea Asset Management has launched a high yielding renminbi-denominated Asian credit fund. Joining the multi-boutique Nordea 1 Sicav, the Renminbi High Yield Bond Fund is managed by Asian fixed income specialists Income Partners.
The new fund invests in USD-denominated Asian high yield bonds, with the USD exposure actively hedged into CNH, as well as CNH-denominated high yield bonds. The managers also seek to provide downside protection against market volatility.
Both the Asian USD high yield and offshore CNH-denominated bond markets have undergone strong expansion in recent years, while the onshore CNY-denominated bond market is set to continue opening up to foreign investors over time.
In a world of compressed yields, these markets are offering attractive yield levels of 9 per cent to 13 per cent – while accommodative monetary policy in China will continue to support the asset class.
Between 50 per cent and 75 per cent of the Nordea 1 – Renminbi High Yield Bond Fund will be allocated to Greater China, with 25 per cent to 50 per cent invested in other parts of Asia. Exposure to the real estate sector will be capped at 40 per cent, with up to 30 per cent in banking and finance.
The Nordea fund will mirror the 5-star Morningstar-rated Income Partners Renminbi High Yield Bond Fund launched in July 2011. This strategy delivered a 10.33 per cent annualised return from inception to the end of April 2015, in USD terms.
“With demand for higher yielding assets showing no signs of slowing down, the income generated by this growing asset class is a compelling proposition for investors,” says Paul Malpas, Nordea Asset Management’s head of UK & US wholesale distribution.
“Our multi-boutique approach at Nordea provides investors with access to some of the top investment talent from across the world. Since its inception more than two decades ago, Income Partners has been a market leader in Asian fixed income strategies.”
