“This strategy reflects our high conviction best ideas for investors who look for a high-income, potentially lower volatility strategy versus Chinese equity.”
- Bryan Collins, Head of Asian Fixed Income and Portfolio Manager
At 9.5%, Chinese high yield bonds offered more attractive income than their counterparts in the US (6.3%) and Europe (4.9%) as of June 20181.
The short duration strategy offers the potential for a more stable performance as the Federal Reserve raises rates in the US.
The China high yield bonds could potentially be a lower volatility alternative to Chinese equities to capture the growth momentum of China.
We remain positive on China’s high yield market. Risk sentiment has weakened compared to the start of the year, and the strong global growth backdrop remains intact.
The US gradually increased interest rates given stronger than expected wage growth, which suggests that we are further into an expansionary phase of the market cycle.
Concerns over a global trade war are likely to lead to continued volatility. Our base case remains that the US and China will eventually resolve their differences. Nonetheless, the recent volatility has made valuations more attractive with a medium-term horizon.
With analysts on the ground, connected research insights across fixed income and equity and a focus on superior risk adjusted returns across our range of products, Fidelity can help you discover the potential of Asian fixed income.
We provide world class investment expertise to help you achieve your financial goals. Fidelity in Singapore offers its funds through banks, brokerage houses, Independent Financial Advisors (IFA) and retail e-platforms.
1Source: Fidelity International. Figures relate to market indices and may not be reflective of actual performance of the fund. ICE BofAML Indices: HQ0C for EHY; HUC0 for USHY; ACYC for CHY, as of 28 June 2018.
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