HSBC Asian High Yield Bond Strategy
HSBC Asian High Yield
Bond Strategy
Seeks to achieve a higher level of income and capital appreciation through investing primarily in a diversified portfolio of higher yielding Asian bonds
Why invest in Asia high yield?
Attractive yields on a relative basis
- Asia high yield bonds now offer competitive yields compared to the US and Europe
Asia high yield: Attractive yields compared to other markets
Yield to maturity (%)
Source: JP Morgan, BAML, as of 31 December 2020.
Indices used are: Asia High Yield – JP Morgan Asia Credit Corporate Index Noninvestment Grade; US High Yield – ICE Bofa US High Yield Index; Euro High
Yield – ICE BofA Euro High Yield Index; EM High Yield – JP Morgan Corporate Emerging Markets Bond Broad Diversified Index Noninvestment Grade
Investment involves risks. The yield is for reference only and is not guaranteed. A positive yield does not imply a return For illustrative purpose only.
Sound fundamentals
- Fundamentals for Asian high yield corporates have been on an improving trend, indicating that a lot of Asian high yield issuers are more equipped to weather uncertainties in the investment environment
Net debt / EBITDA is trending down
Net debt / EBITDA
Adequate liquidity with cash / total debt rising
Cash / total debt
Source : Bloomberg and J.P.Morgan. Estimates based on JP Morgan report dated December 2020
Diversification benefits
- Asian high yield bonds exhibit low correlation to other asset classes
Correlation of spreads
| Asia high yield | EM investment grade | EM high yield | US investment grade | US high yield | Euro investment grade | Euro high yield | |
| Asia high yield | 1.00 | ||||||
| EM investment grade | 0.34 | 1.00 | |||||
| EM high yield | 0.63 | 0.82 | 1.00 | ||||
| US investment grade | 0.61 | 0.60 | 0.76 | 1.00 | |||
| US high yield | 0.50 | 0.70 | 0.78 | 0.75 | 1.00 | ||
| Euro investment grade | 0.53 | 0.50 | 0.65 | 0.74 | 0.65 | 1.00 | |
| Euro high yield | 0.58 | 0.52 | 0.70 | 0.72 | 0.75 | 0.84 | 1.00 |
|
Source: Bloomberg, JP Morgan, BAML, HSBC Global Asset Management. Correlation calculated from spreads, for the 5-year period as of 5 January 2021. |
|||||||
Why consider this strategy?
|
Strong credit selection processComprehensive bottom up credit process designed to systematically avoid defaults or credit deterioration |
Managed by award winning Asian fixed income team1One of the largest and most experienced Asian fixed income teams |
|
|
Flexible, diversified approachThe strategy has the flexibility to invest in investment grade bonds and off benchmark names |
Equipped to navigate volatile marketsThe Asian fixed income team has been investing in Asian bonds throughout various market cycles for nearly 25 years |
|
|
Solid track recordHSBC Global Asset Management has established a solid track record in managing a dedicated Asia high yield strategy since 2011 |
Note 1: Awards issued by Asia Asset Management as of 31 December 2019 for Best of the Best Awards for Asian Bond House category. Award assessment was based on multiple factors including the candidate’s management of capturing existing inefficiencies in the market and long-term opportunities; other factors taken into consideration included the size of business, scope of coverage, staffing, portfolio management and research resources, and plans for the future. Awards won by HSBC Global Asset Management includes Best of the Best Awards for Asian Bond House category by Asia Asset Management 2015, 2016, 2017, 2018, 2020.
For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.
Resources
Asia credit: Navigating the winds of change
Read the article
Asia high yield: Standing tall in a low yield world
Watch the video
The compelling case for Asia high yield bonds
Watch the video
Asian fixed income watch
Read the article
Asia credit: Navigating the winds of change
Read the article
This page is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Any views and opinions expressed are subject to change without notice. This document does not constitute an offering document and should not be construed as a recommendation, an offer to sell or the solicitation of an offer to purchase or subscribe to any investment. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (Hong Kong) Limited (“AMHK”) accepts no liability for any failure to meet such forecast, projection or target. AMHK has based this document on information obtained from sources it reasonably believes to be reliable. However, AMHK does not warrant, guarantee or represent, expressly or by implication, the accuracy, validity or completeness of such information. Investment involves risk. Past performance is not indicative of future performance. Please refer to the offering document for further details including the risk factors. This document has not been reviewed by the Securities and Futures Commission. Copyright © HSBC Global Asset Management (Hong Kong) Limited 2020. All rights reserved. This document is issued by HSBC Global Asset Management (Hong Kong) Limited.
Important Information
- The strategy invests mainly in Asian high yield bonds
- The strategy is subject to the risk of investing in emerging markets
- Debt instruments with loss-absorption features, non-investment grade bonds and unrated bonds are subject to additional risks and volatility
- Because the strategy’s base currency, investments and classes may be denominated in different currencies, investors may be affected adversely by exchange controls and exchange rate fluctuations. There is no guarantee that the currency hedging strategy applied will achieve its desired result
- The strategy may invest in financial derivative instruments for investment purpose which may lead to higher volatility to its net asset value
- The strategy’s investments may involve substantial credit, currency, volatility, liquidity, interest rate, tax and political risks. Investors may suffer substantial loss of their investments in the strategy