Schroders launches ISF RMB Fixed Income fund
Schroders has launched its ISF RMB Fixed Income, a new strategy which will provide an opportunity for offshore investors to access China’s fixed income market in the Chinese currency.
The fund’s launch follows the success of the Hong Kong domiciled RMB Fixed Income fund and will seek to tap into the broader demand for RMB bonds, the firm said.
The fund is actively managed and will use the HSBC Offshore RMB Investment Grade Bond Total Return index as a reference.
It is managed by the Asian Fixed Income team, which draws on the expertise of around 30 credit analysts led by Rajeev De Mello, head of Asian fixed income, and Angus Hui, Asian fixed income fund manager.
The fund is available in the UK, Germany and France, and will be launched in Italy in December.
The investment philosophy seeks to build a diversified portfolio expressing the team’s fundamental views on the direction of the Chinese bond market, selection of maturities along the yield curve, sector and company selection.
Investments will be in Chinese government bonds and Chinese and foreign companies bonds issued in RMB.
“In the current low interest rate environment, offshore RMB bonds provide an attractive yield of 4.0% for the overall index and 3.6% for the investment grade non-government sector,” de Mello said.
With now higher yields and a wider investment universe to add value from security selection and relative value rotation, offshore RMB bonds provide investors with multiple sources of return potential in addition to the currency appreciation.
He added: “The investment grade quality of credits combined with a robust yield, not only offers investors a practical way of protecting their portfolios from global uncertainty but also gives them long-term potential in an exciting and growing market.”