Aviva Investors launches new high yield bond strategy

Aviva Investors has announced the launch of the Aviva Investors Asian High Yield Bond Strategy in response to growing demand from institutional investors seeking diversification within the fixed income asset class with higher average returns.

This new Luxembourg-domiciled strategy is an addition to Aviva Investors’ already existing global high yield capability which has investment professionals in the US, Europe and Asia.

The strategy seeks out-performance against the JP Morgan Asia Non Investment Grade Corporate Credit Index by investing in corporates across Asia in both USD and local currencies.

Kevin Talbot, CIO Asian Fixed income, said:  “The Asian high yield market has a very low correlation with government bonds. Historically, it has also outperformed US high-yield despite better than average credit ratings whilst outperforming Asian equities for around half the volatility.”

According to Talbot, this suggests good diversification potential for fixed income investors globally.

“While the market is notably more sector concentrated than its US counterpart it offers access to an attractive spread of Asia’s fast growing economies,” he added.

The strategy is managed by Aviva Investors’ Asian fixed income team, headed by Kevin Talbot and with assets under management of USD2.8bn. Tim Jagger, SVP & Portfolio Manager, Fixed Income- Asia, is the lead fund manager seeking to lever both Aviva Investors’ global fixed income capabilities and the information advantages that come from operating a team of high-quality analysts and portfolio managers in Singapore.

Jagger commented: “The Asian high yield market offers numerous attractions as a standalone asset class and has enjoyed prodigious growth.

“Over the last three years, the market has more than trebled to over USD90bn in the USD space alone. Growth in regional currencies, such as CNH, has been robust also. This makes local expertise critical to delivering consistent risk-adjusted returns.”

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