BNY Mellon is launching an Asian bond fund for its Singapore-based Standish fixed income team.
Standish head of Asian fixed income Murray Collis will be lead manager on the Dublin-domiciled BNY Mellon Asian Bond fund.
Currently being registered in the UK, Germany, France, Singapore, Spain and Italy, the fund will invest across the fixed income spectrum in Asia.
Most investments will be US dollar denominated, with 15 per cent in soft currencies. About 60 per cent of the fund will be in credit, while the remaining quarter will be in interest rate strategies.
Its benchmark will be the JP Morgan Credit Index (JACI), a US-denominated only Asian bond index.
BNY Mellon says US-dollar Asian corporate bonds offer a yield premium above similarly rated US issues.
“In addition to the higher yield available, Asian bonds should be viewed as an important source of diversification,” the firm says.
“Historically Asian bonds have demonstrated low volatility and correlation with other markets.”
BNY Mellon hopes the fund will capitalise on the region’s growth: More than half of the world’s population live in Asia, according to UN figures.
The region’s economic power is “the crux” of the strategy, with the fastest growing GDP per capita rates of any other part of the globe, BNY Mellon says.
“We believe it is the right time to tap into the Asia’s positive attributes, chiefly its rising share of world GDP, its favourable population dynamics and its shift to a sustainable growth model that emphasises productivity and consumption,” the firm says.
“The outlook for population growth and the wealth effects for Asia is striking.”