The Singapore-based fixed income team Standish is led by head of Asian fixed income, Murray Collis, who will be the chief manager of the Dublin-domiciled BNY Mellon Asian Bond Fund.
The company said the initial focus of the strategy’s launch will be Europe, where investors have been yields push lower as a consequence of European Central Bank policy actions.
The fund will be benchmarked against the US-denominated only Asian bond index, JP Morgan Credit Index (JACI).
Around 60% of the fund will invest in credit, 25% in rates and 15% in local currency. The company added that Asian US dollar-denominated bonds offer some additional yield over similarly rated US corporate bonds, and can be viewed as an important source of diversification.
“As the region’s capital markets grow and develop, increasing depth and liquidity in the market should result, offering investors greater choice. Asian bonds still offer a yield premium to other bond markets,” the firm said.
Historically Asian bonds have demonstrated low volatility and correlation with other markets. The yields of Asian bonds historically reflected the lower investment risks in the region, BNY Mellon added.
This leads into the firm’s philosophy that the Asian market will be able to offer investors the opportunity to capitalise on regional growth.
In the long term, the firm said it believed that strong valuations are justified for Asian bonds based on the region’s robust macroeconomic outlook. The relatively low levels of corporate and sovereign leverage and yields are attractive when compared to those of developed markets.
