New China bond fund from Schroders

Rob St George 28 Nov 2012 | News - Comment now

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New China bond fund from Schroders

Schroders has launched a fund that will provide access to China’s fixed income market denominated in the renminbi (RMB), the Chinese currency.

The Schroder ISF RMB Fixed Income fund will be actively managed and will take the HSBC Offshore RMB Investment Grade Bond Total Return Index as its benchmark.

‘After the success of the Hong Kong-based offshore RMB bond fund, launched in 2010, and the continued growth and development within the offshore RMB bond market, we are keen to extend this product offering to a broader range of clients,’ commented Karl Dasher, global head of fixed income at Schroders.

‘This reflects Schroders’ commitment to the developing asset class, which has enjoyed an exceptional growth trajectory over recent years and our belief that the RMB’s importance in a global context is increasing rapidly, providing a solid long-term fundamental story for the currency,’ he added.

The fund will be managed by Rajeev De Mello and Angus Hui, respectively head of Asian fixed income and Asian fixed income fund manager. Their investments will be diversified between Chinese government bonds and Chinese and foreign corporate bonds issued in RMB, targeting ‘long-term capital growth and income’.

‘In the current low interest rate environment, offshore RMB bonds provide an attractive yield of 4 per cent for the overall index and 3.6 per cent for the investment grade non-government sector,’ said de Mello.

‘With now higher yields and a wider investment universe to add value from security selection and relative value rotation,’ he continued, ‘offshore RMB bonds provide investors with multiple sources of return potential in addition to the currency appreciation. 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.’

The minimum investment is $1,000 (£625), or the equivalent in a local currency, with an annual management charge of 0.75 per cent and an initial fee of 5.26 per cent.

Related topics: Bond funds, Bonds, BRIC economies, Corporate bonds, Income investing Schroders

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