The Case for Asian Fixed Income
Diverse Asia Bonds hit the sweet spot
In a still-low yield environment and heighten uncertainty on trade and geopolitics, Asia bonds provide strategic allocation appeal and diversification benefit. The asset class potentially provide an opportunity to diversify one's portfolio while meeting the objective of high yielding, lower-risk, regular cash flow.
Diverse currencies exposure may add to alpha in different time periods and market cycles.
Asia has come a long way since the Asian Financial Crisis of 20 years ago, as evidenced by the stronger GDP growth and lower government leverage.
Most of Asian countries’ sovereign credit rating are investment grade quality, with higher yields versus Developed Markets
Asian bond returns comprise of local bond returns and currency returns, which potentially provide better risk reward returns than most emerging market debt indices.
Blossom with Legg Mason Western Asset Asian Opportunities Fund
The Legg Mason Western Asset Asian Opportunities Fund seeks to maximise total return through income and capital appreciation by investing at least 70% in debt securities issued by Asian issuers and in derivatives on Asian interest rates and currencies. The Fund seeks to tap on the strong economic fundamentals of Asian economies and potential of currency appreciation to maximise total return.
We use a High Quality Top Down, Bottom Up Approach to Capture Asian Bonds Alpha.
Key Fund Features include:
OPEC production cuts and oil demand
The new OPEC+ deal to cut production should help stabilize the oil market, but it's far from clear when the slump in global demand may reverse.
Head of Investment Management, Asia (ex-Japan)/ Portfolio Manager
Western Asset Management
27 years of industry experience.
Joined Western Asset in 2012.
Chia Liang Lian
Head of Emerging Markets Debt/ Portfolio Manager
Western Asset Management
25 years of industry experience.
Joined Western Asset in 2011.
1 Morningstar Award 2020 and Morningstar Awards 2018 ©. Copyright 2020 Morningstar, Inc. All rights reserved. Awarded to Legg Mason Western Asset Asian Opportunities Fund (Class A USD Acc) for Category Winner, Best Asia Bond Fund, Singapore.
2 Source: BNY Mellon, latest annualised dividend rate (ex-date 16 November 2020) as of 19 November 2020. Annualised dividend rate = (Dividend per Unit / Fund NAV as of Ex-Date) x (365 Days/Days in distribution period) x 100%. Dividend rate is not indicative of fund performance. A positive dividend yield does not imply a positive return. Past dividend rate is not indicative of future dividend rate. Net asset value of the funds may volatile subject to market factors.
3 Source: Legg Mason, Western Asset, as of 31 October 2020. Credit Quality: Nationally Recognised Statistical Rating Organisation's (NRSRO's) assess the likelihood of bond issuers defaulting on a bond's coupon and principal payments. The credit quality allocation by Western Asset Management assigns each security the higher rating from three NRSRO's (Standard & Poor's, Moody's Investor Services and Fitch Ratings, Ltd.). If only one NRSRO assigns a rating, that rating will be used. Securities that are not rated by all three NRSRO's are reflected as such. The lower the overall credit rating, the riskier the portfolio. The credit rating is expressed as a regular letter rating (from high to low quality): AAA, AA, A, BBB, BB, ...D.
Source: Legg Mason and Western Asset, as of 31 October 2020. This document, provided by Legg Mason Asset Management Singapore Pte. Limited (“Franklin Templeton”) (Registration Number (UEN): 200007942R), is for information and does not constitute an offer or solicitation to buy or sell any units in any fund.
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