Fund Rationale: Eastspring Asia Sustainable Bond Fund

Eastspring Asia Sustainable Bond Fund (the “Fund”)
SGD Hedged Class AS Accumulation Shares (ISIN: LU2347918182)
Fund Manager Page
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Endowus has selected the Fund as it:

  • Combines Eastspring's expertise in the Asia fixed income space with their ESG capability, and is the first Asia ESG bond fund on the market for retail investors;
  • Employs a team-based, structured investment process which integrates a disciplined and well-articulated ESG process that has accountability and consistency;
  • Has the best risk-adjusted performance amongst its peers, notwithstanding that all Asia ESG bond funds have relatively short track records; and
  • Offers a newly launched SGD hedged share class, which is a retail share class with 100% trailer fee rebated back to Endowus investors to achieve lower cost of access. Endowus has worked with Eastspring to launch this share class.

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Key Information

Fund Objective: Aims to invest in a mix of green, social, and sustainability (“GSS”) bonds, and other debt securities issued by Asian governments, quasi-governments, corporates, or supranationals, which are aligned to internal Environmental, Social and Governance (“ESG”) principles.

Suitability: Investors who aim to maximise returns, are comfortable with the risks of a bond fund that invests in a mix of rated and unrated debt securities issued by Asian governments and corporations which are aligned to internal ESG principles, and appreciate that their capital will be at risk and that the value of their investment and any derived income may fall as well as rise. 

Cost: 
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  1. Total Fund-level Fees include fund management fee of 1.00%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus does not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 16 December 2019
Share Class Inception: 17 June 2021
Benchmark: No benchmark (Endowus typically uses the Bloomberg Barclays Global Aggregate fixed income index as a representative index to benchmark performance over the long term.)  

Fund AUM: SGD 74.6m
Source: MorningStar as of  24 June 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 31 May 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.

Selection Criteria

Endowus has selected the Fund because we believe that this strategy is well-designed to combine Eastspring’s Asia fixed income expertise with their ESG capability. In reality, most of the past developments in ESG investing has been in developed equity markets while challenges still abound for ESG investing in developing countries and in bond markets. Under this backdrop, Eastspring have put in serious effort to design, articulate, implement, systemise, and improve their ESG process, and have launched the first Asia ESG bond fund for retail investors. 

The Fund is managed by an experienced team and has a structured investment process that focuses on fundamental credit selection with an ESG lens. The Fund primarily invests in investment grade USD bonds, but it also has the flexibility to invest in local currency  bonds and utilise FX to deliver additional alpha. The team is well-resourced in terms of investment experience and specialisation. The portfolio managers, Rong Ren and Yong Hong, have on average over 17 years of investment experience, with Rong Ren’s background in local rates and Yong Hong’s in credit selection. They are supported by 12 credit analysts with strong fixed income investment backgrounds.

The ESG integration process is also disciplined and well-articulated with accountability and consistency. While the team has access to third party data, they do not rely on it and instead produce their own ESG rating on each issuer — this is done by the credit analysts as part of the fundamental analysis using an internally-developed proprietary framework. The framework assesses ESG risk and opportunities and the issuer’s preparedness to ESG risks. When constructing the portfolio, issuers with high ESG risk and low preparedness would be excluded. In addition, the ESG assessment also impacts position sizing — larger allocations would be made to issuers with higher ESG scores. 

The Fund has delivered the highest risk-adjusted return compared to its peers, notwithstanding relatively short track records across strategies in this space. It also has a 5-year duration cap. Investors should take note that investing solely in this Fund involves taking on concentrated regional risk, and it is advisable to consider your investment objective and diversify your holdings with exposure to other regions and asset classes.

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Updated by Endowus: July 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.
The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.