In the current low interest rate environment, investors continue to chase for yields which resulted in strong demand for close-ended bond funds that potentially offers higher return than fixed deposits. Keeping this in mind, Eastspring Investments is launching a new fund.
The fund endeavors to provide regular income during the tenure of the fund (3 years), by investing in local and/or foreign debt securities.
Investment StrategyA minimum of 70% will be invested in local and/or foreign debt securities, while the remaining of not more than 40% may be invested either in non-rated debt securities and/or debt securities rated below investment grade rating.
- lower than BBB3 rating by RAM; or
- below investment grade rating by other rating agencies
Although the fund is expected to invest up to 40% in non-rated issuers and/or issuers rated below investment grade, there is a risk that this limit may be exceeded as issuers of investment grade debt securities held within the portfolio may be downgraded by rating agencies and thus resulting in the fund's over exposure in such category.
Additionally, up to 30% may invested in money market instruments, and worth to note that the fund may exercise Early Repayment. As such, this is a moderate risk fund, instead of low risk.
The fund is suitable for investors who:-
- seek regular income distribution;
- have 3 years investment horizon; and
- have a moderate risk tolerance.