Eastspring Securities Investment Trust is boosting its holdings of bonds in Indonesia and South Korea.
It based its decision on the expectation that policy makers in the two nations will favor currency gains to limit inflation as oil prices increase.
Indonesia’s debt was raised to investment grade by Fitch Ratings and Moody’s Investors Service in the past year and its local-currency government bonds are leading gains in Asia for the fourth year in a row, HSBC Holdings indexes show. Indonesia’s bonds handed investors a 3 percent return so far in 2012.
“In order to maintain growth, regional central banks may let their currencies rise to fight inflation instead of raising interest rates,” said Chou, who helps oversee US$1.8 billion at Eastspring, the asset-management unit of Prudential, the Britain’s biggest insurer. “Yields are attractive when you consider these countries actually have sound economic fundamentals and pretty good ratings.”
According to Bloomberg, the $255 million Eastspring Global High Yield Bond Fund, run by Taipei-based Connie Chou, is this year’s fourth-best performer among more than 70 fixed-income funds based in Taiwan, beating 93 percent of its rivals with a 6.7 percent return.
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