WEALTH MANAGEMENT | Cesar Tordesillas, Malaysia

CIMB new bond fund capitalises on regional credit conditions

The CIMB-Principal's Strategic Income Bond Fund will allow investors to capitalise on improving credit conditions in certain regions. These include Asia, Australia, New Zealand and the Middle East. The CIMB recently launched the fund to capitalise on the high potential of more rating upgrades.


Campbell Tupling, Chief Executive of CIMB-Principal Asset Management said, "The demand for high-quality bonds in Asia, Australia, New Zealand and Middle East continues to remain high given the low interest rates outlook in the US and Europe, and this should support bond prices for the next few years. In addition, the slower economic recovery of these developed markets is shifting investment appetite to Asia. Combined with the likelihood of bond rating upgrades, this will mean potential good returns for investors who want to invest in regional high growth prospects in a stable manner."

Post-financial crisis, bonds remain the preferred asset class for more conservative investors because it is less volatile than equities. Asia, for example, remains a sound investment destination with rapid urbanisation, as a younger and higher population growth will necessitate greater infrastructure spending in the coming years. This provides the golden opportunity to profit from the economic power of Asia, Australia, New Zealand and the Middle East.

"By taking a three year buy-and-hold strategy, the Fund is buffered from interest rate fluctuations. This means returns will be predictable and in addition to potentially higher than that of cash deposits. We believe that there are many investors who are concerned that the rate of inflation is rising faster than the value of their cash deposits," Tupling added.

CIMB-Principal Strategic Income Bond Fund will invest between 70 per cent to 98 per ceny of the Fund's net asset value in a diversified portfolio of bonds and other fixed and floating rate securities issued by governments, government agencies, supranational organisations and corporate issuers. The Fund may also invest in high-yield securities subject to a maximum of 40 per cent of its NAV. High-yield securities are securities rated below Baa by Moody's or equivalently rated by S&P or Fitch.


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