Post-financial crisis, bonds remain the preferred asset class for more conservative investors because it is less volatile than equities. Asia, for example, remains a sound investment destination with rapid urbanization as a younger and higher population growth will necessitate greater infrastructure spending in the coming years.
To provides the golden opportunity, CIMB-Principal Asset Management Bhd has launched a new fund, that allows investors to capitalise on Asia, Australia, New Zealand and Middle East's improving credit conditions given the high potential of more rating upgrades.
"The demand for high-quality bonds in these targeted countries continues to remain high given the low interest rates outlook in the US and Europe, and this should support bond prices for the next few years. In addition, the slower economic recovery of these developed markets is shifting investment appetite to Asia. Combined with the likelihood of bond rating upgrades, this will mean potential good returns for investors who want to invest in regional high growth prospects in a stable manner." said Campbell Tupling, chief executive of CIMB-Principal Asset Management.
More about the fund....
This is a close-ended fund that aims to provide regular income and capital preservation through investments in predominantly bonds and other fixed and floating rate securities.
What's the strategy?
Generally, the fund adopts a buy-and-hold strategy by investing 70%-90% of its NAV in a diversified portfolio of bonds and other fixed and floating rate securities issued by governments, government agencies, supranational organizations and corporate issuers. The fund may also invest in structured products and/or derivatives, in which the underlying are linked to the above mentioned securities.
What's the bonds/securities rating you're looking at?
The fund may invest in investment grade securities and high yield securities, subject to a maximum 40% of its NAV in securities rated below "Baa" by Moody's or equivalent rated by S&P and Fitch.
The fund is suitable for investors who:
- have 3 years investment goals
- are not planning to have access to their money in the next 3 years
- are seeking exposure to investment opportunities in fixed income securities
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