Endowus has selected the Fund as it offers:
Fund Objective: The Fund aims to achieve income and capital appreciation by investing primarily in investment-grade fixed income securities of issuers that have their principal business activities in the Asian region.
Suitability: Investors who seek a fund that aims to provide investors with relatively high income with the possibility of capital gains, wish to participate in debt markets while being prepared to accept risks, and seek short, medium or long-term investment.
Fund Inception: 18 April 2011
Share Class Inception: 13 June 2016
Benchmark: ICE BofAML Asian Dollar Investment Grade Index
Fund AUM: SGD 4.46bn
Source: MorningStar as of 24 June 2021. Please refer to the FMC page for the most updated AUM.
Source: MorningStar as of 30 April 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.
Endowus has selected the Fidelity Asian Bond Fund because it offers direct exposure to Asian Investment Grade bonds, and it benefits from having an experienced lead portfolio manager Eric Wong, a well-resourced and dedicated research team, and a robust investment framework. Additionally, it is able to generate attractive distribution that is supported mainly by coupons and some capital appreciation.
The Fund’s mandate is to invest primarily in Investment Grade bonds in Asia. Compared to many peers in the Asian credit space, which usually would allocate 20-30% to High Yield bonds, this fund has a soft limit of 10% allocation to High Yield bonds and therefore offers relatively pure exposure to Investment Grade. It should be noted that the mandate allows up to 30% allocation to off-benchmark names, which would include up to 10% in Asian High Yield bonds. The manager has invested in off-benchmark countries such as Japan, Australia, and the United States which have added value, but these active bets may also contribute to heightened volatility at times.
The Fund is managed by Eric Wong, who has more than 18 years of investment experience. He also manages Fidelity’s Emerging Markets Debt strategy, which has delivered stellar performance against peers. While he is the lead portfolio manager ("PM") that makes the final call, there are 2 co-PMs to reduce key man dependency. The PM team is supported by a well-resourced and dedicated credit research team that has been growing over the years.
The investment framework is robust and starts with understanding the market environment and deciding on the market beta allocation. This is followed by country selection where the outlook and relative value view on each country is formed. Within each country, the credit analysts conduct fundamental research on the securities while also considering relative value and technical support. The portfolio manager stays within the modest tracking error budget as well as a duration range of ±1.5 years relative to the benchmark when constructing the portfolio.
The Fund’s MINCOME(G) share class pays a stable and attractive level of distribution that mostly comes from coupons of the underlying assets. The level of distribution is subject to regular committee review and the current target is 4%.
Investors should take note that solely investing in this Fund involves taking on specific risks in Asian markets, and should consider diversifying their portfolio across other geographies.
Updated by Endowus: June 2021
** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
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