Invesco’s fixed income mutual fund with exposure to the Belt and Road (B&R) investment theme is now available for investors in EMEA.
The Invesco Belt and Road Debt Fund was launched last March under restricted registration in Singapore available only to high-net-worth investors and Hong Kong for retail investors.
The fund seeks long-term total returns by integrating a thematic approach while aims to benefit from capital gain potential across regional bond markets fuelled by this long-term development strategy.
It will invest primarily in USD sovereign bonds, investment grade and high yield corporate bonds from select issuers that could directly or indirectly benefit from increasing capital and trade flows, catalysed by the B&R initiative. It follows a flexible top-down and bottom-up investment approach, with active country allocations and the ability to explore a wide range of securities independent of any benchmark.
The fund can invest up to 10% in equities from the B&R initiative region. Strong risk mitigation is enforced to cap forward-looking volatility most of the time, with the ability to tactically raise cash up to 30% in anticipation of rising market risks, Invesco explained.
The fund will be managed by a team of investment professionals, with Ken Hu, Chief Investment Officer, Fixed Income, Asia Pacific at its core.
Launched in 2013 by Chinese President Xi Jinping, the B&R initiative was set up to promote the land and sea connectivity along Asia, Europe, the Middle East and Africa, with the aim of establishing and strengthening economic partnerships and cooperation across these regions.
The project will potentially involve cooperation agreements with 68 countries on three continents, covering 65% of the world’s population and 40% of global GDP as of 2017.
Sergio Trezzi, head of Retail Distribution EMEA (ex-UK) and Latin America, said: “We are extremely pleased to be launching the Invesco Belt and Road Debt Fund, which addresses the growing interest in theme based investing. Demand for thematic investment is growing in the European markets, in particular in the wealth management channel, considering the longer-term investment opportunities coming from macro, social and cultural trends.”
Ken Hu, Chief Investment Officer, Fixed Income, Asia Pacific at Invesco added: “The Belt and Road Initiative sounds very China-centric, but it is actually a great opportunity for fixed income investors with a multi-regional outlook. The fact that the Belt & Road Initiative was written into the Chinese Constitution in 2017 ensures that it will remain a long-term priority for government authorities and private enterprises. In addition, as trade tensions with the US rise, China’s commitment to the Belt & Road Initiative should deepen and as the US, EU, UK and Japan are increasingly competing with China on direct investments in the Belt and Road region, the recipient countries would benefit from capital inflows. We focus on the countries which receive capital inflows and would turn them into productive and sustainable uses.”
“The Invesco Belt and Road Debt Fund will strive to capture the investment opportunities arising from the B&R initiative and, in our view, could be an interesting strategy for investors seeking long-term potential capital growth and income.”