Neuberger Berman has added a new Asian-focused fixed income fund to its emerging debt offering and is planning two more fund launches.
The Asian Debt Hard Currency fund will invest in government and related debt as well as in corporate bonds.
The fund will be managed by Neuberger Berman’s Asian debt team, led by portfolio manager Prashant Singh and fund managers Nish Popat and Jennifer Gorgoll. The fund’s annual management charge is 1.2 per cent.
Singh says: “Asia is the deepest and most liquid of the emerging debt capital markets, partly as a result of the concerted efforts of the authorities to bolster themselves against a repeat of the financial crises of the late 1990s.
“Trading volumes and bid-ask spreads on government bonds have improved consistently over the last decade and are in some cases even better than in some developed markets, adjusted for market capitalisation.”
The company also plans to launch a China Bond fund and Asia Debt Local Currency fund to the market.
Singh says he continues to see growth in emerging markets, although this is “very slow”.
Particularly, Singh believes the opening up of China onshore markets will continue to gather pace. He says the next steps will be a further compression of quota and interbank access approval times.
In addition to that, he sees the creation of more Renminbi Qualified Institutional Investor centres and the homogenisation of QFII and RQFII regulations, which will favour more foreign investments in the Chinese domestic market.
Singh says: “These reforms are occurring alongside deposit and exchange rate liberalisation, a gradual opening of balance-of-payment accounts, and more free trade zones, as China navigates the transition from a centrally-planned, export-driven economy to one that is more market-determined and balanced.
“This will provide investors with deeper, more liquid capital markets in the region. Just as important, the early stage of China’s reforms and the remaining levers its authorities still have to pull to liberalise capital markets and achieve further productivity convergence with neighbours such as Taiwan and Korea indicates the huge potential of this economy, which already represents almost 60 per cent of emerging Asia’s GDP.”