Fund manager abrdn has launched a short-dated income strategy aimed at investors in Asia, arguing that people are not being compensated in today’s economic environment by holding bonds with longer maturities.
The global short-dated enhance fixed income strategy targets an average issuer rating of ‘A’ and duration of one and two years. A low duration profile offers relatively low exposure to the risk of rising policy interest rates, highlighted abrdn, who said the strategy suits investors seeking “attractive yet stable income” in the current economic environment.
According to the firm, investors today are not compensated with additional yield for holding longer maturity bonds, making shorter maturity bonds relatively more attractive from an income perspective, while maintaining an overall low-risk profile.
Thomas Drissner, head of Asian credit research at abrdn, said: “We capture attractive yields on short-dated government bonds and seek to enhance the strategy by introducing best ideas across developed and emerging corporate bond markets. This positions [the strategy] as an attractive alternative to holding cash while benefiting from fixed income growth opportunities.”
Additionally, the strategy offers liquidity characteristics as shorter-maturity bonds tend to have more significant trading volumes compared to higher-maturity bonds.
Mark Munro, investment director, abrdn, said there is currently a “stronger case” for increased allocations to short-dated bonds due to the significantly increased absolute level of yields, coupled with yield curve inversion, which makes abrdn’s strategy “well positioned to deliver unique outcomes for investors”.
The fund is currently available to retail and institutional investors in Singapore and professional investors in Hong Kong only.
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