UBS Asset Management (‘UBS AM’) today announced that UBS AM (Shanghai) Limited, its wholly foreign-owned enterprise (WFOE), has launched a private fixed-income fund, “UBS (CN) China Yufeng Fixed Income Bond Strategic Series 5 Private Securities Investment Fund”.
The fund has filed with the Asset Management Association of China (AMAC), according to the announcement.
Brian Lou, portfolio manager at UBS AM and manager of the fund, said that by using an overseas fixed maturity fund strategy, the fixed interval bond fund aims to lock in expected returns within a fixed period and, based on a flexible and diversified allocation, provide a robust fixed-income solution for institutional investors in China.
UBS AM’s fixed income team has issued nine bond products, three of which were launched in 2020.
Taking into account factors including interest rate-sensitivity and corporate rates of return, these products harness cash management strategy.
They also tackle interval and flexible bond strategies, to establish a diversified strategy that satisfies the diverse risk / return needs of investors, according to UBS AM.
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Bullish on China bond market investment potential
The UBS AM fixed income team said that it has long been bullish on the investment potential of China’s bond market. Hayden Briscoe, head of Asia Pacific fixed income, believes that China government bonds offer a unique value proposition to investors based on low correlation and volatility as well as attractive yields, as world bond markets shift to negative yields,
“We seek alpha opportunities based on the safety cushion of allocations to rate bonds and high-grade credit bonds in the second half of the year, such as the mergers of leading players in some sectors. Meanwhile, we have been tracking the credit bonds of industry leaders in real estate, infrastructure, consumers, healthcare, nonferrous metals and machinery. All of these require asset managers to conduct careful and top-down research,” said Lou.
“The speed with which the fund was launched is a testament to the faith that distributors and customers have in our ability to match international investment savvy with the needs of domestic investors,” Adrian Chen, general manager of UBS AM, noted.
Lou added that in terms of risk control and in line with UBS AM’s global methodology, the firm insists on a high degree of diversification as well as a top-down approach coupled with macro analysis.
“At the same time, we have sought to lower net value volatility through a more precise duration management in an effort to provide more localized products to customers,” he added.
“In implementing its China strategy, UBS AM has consistently stressed a customer-oriented and product-based approach, to achieve our aim of becoming the ‘first call for China’ by combining overseas experience with local investment capabilities,” Raymond Yin, head of Asia Pacific and head of China onshore at UBS AM, said.