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Diversifying your portfolio with Asian equities and bonds can be a good strategy during precarious times

Despite pandemic-induced challenges, Asia remains a key growth engine and Asian bonds are increasingly attractive for investors

To help investors generate returns in the current environment, the PineBridge Acorns of Asia Balanced Fund offers the dual opportunities of potentially earning long-term capital growth while being protected against volatility. PHOTO: SHUTTERSTOCK
To help investors generate returns in the current environment, the PineBridge Acorns of Asia Balanced Fund offers the dual opportunities of potentially earning long-term capital growth while being protected against volatility. PHOTO: SHUTTERSTOCK

While the global economic recovery is expected to continue in the months ahead despite the resurgence of Covid-19 infections, markets in Asia remain volatile. The International Monetary Fund’s latest World Economic Outlook in July forecasts the global economy to grow 6 per cent this year, up from a contraction of 3.2 per cent last year. 

However, many risks could disrupt this growth trajectory – from slower than expected vaccine roll-outs to tighter monetary policy in response to rising inflation expectations. This could result in heightened uncertainty that could make it harder for investors to achieve their desired returns. 

Against this backdrop, investors could adopt a balanced approach to capture growth opportunities in the region, while generating a regular stream of income amid the uncertainty. 

“We believe a portfolio combining fast-growing Asian companies and Asian bonds, primarily those denominated in Singapore dollars (SGD), is a compelling way to access both capital appreciation and stable income. In an actively managed balanced fund, allocations to these two asset classes are adjusted according to market conditions to help enhance returns,” says Ms Elizabeth Soon, CFA, head of Asia ex-Japan Equities at PineBridge Investments and co-manager of the PineBridge Acorns of Asia Balanced Fund.

Asia equities offer investors the opportunity to capture long-term capital appreciation from the region’s structural trends, such as digitalisation, urbanisation and environmental, social and governance (ESG) improvements. Meanwhile, Asian bonds may deliver competitive yields and shorter duration compared with global peers, offering a buffer to potential interest rate hikes. 

The importance of active investing

Investors may look to managers that actively manage their portfolios to help boost returns. Active, benchmark-agnostic investing allows the portfolio managers the flexibility to look for the most compelling opportunities across the entire investment universe based on their research assessments.

Essentially, active investors seek to outperform their benchmarks, while passive investors try to replicate the returns of the benchmark by owning all the companies or issuers represented in the index. With active investing, portfolio managers have the flexibility to adjust for market shifts, new and emerging opportunities as well as risks – which may offer advantages in times of market volatility. 

Balanced strategy for long-term capital growth and protection against volatility

The PineBridge Acorns of Asia Balanced Fund invests in the equities of fast-growing Asian (excluding Japan) companies and fixed income securities of high credit quality issuers, denominated primarily in Singapore dollars. 

“With a balanced approach, we offer investors the opportunity to remain invested in growth and defensive opportunities through market cycles – providing a variety of potential sources of alpha,” says Ms Soon.

PineBridge adopts an actively managed, research-driven approach that focuses on generating returns through security selection. Therefore, the firm’s portfolio holdings are highly differentiated from the index, whether in equities or fixed income. This process is facilitated by close collaboration between the fund’s dedicated team and the firm’s other investment professionals around the world.

In Asia equities, the strategy’s bottom-up approach aims to identify Asian companies with exceptional competitive advantages, excellent management and reasonable valuations that can offer sustainable returns over time.

PineBridge’s deep expertise in Asian fixed income strategies

PineBridge has been managing Asian fixed income strategies across local and hard currency markets for more than 20 years. The team pursues a thoughtful credit selection approach across industries, duration, ratings and yield to uncover value. This involves combining bottom-up and top-down research to select credit opportunities.

“Our deep knowledge of Asia’s market dynamics and its issuers, gained over many years of investing locally, translates into a robust credit strategy that cuts through market cycles and delivers value for our investors,” says Mr Omar Slim, CFA, senior portfolio manager, Asia Fixed Income and co-manager of the PineBridge Acorns of Asia Balanced Fund. 

At a time when developed markets have little to offer in terms of yield, SGD bonds, in particular, have stepped up by delivering competitive returns. The SGD bond market has remained stable, underpinned by the city-state’s strong economic fundamentals and top sovereign rating.

With its comprehensive investment capabilities and a long track-record in Asia, PineBridge is well positioned to guide investors in generating long-term returns in this part of the world. As at June 30, the firm managed US$141.4 billion (approximately S$190.4 billion) across global asset classes for investors around the world.

Click here to find out more about the PineBridge Acorns of Asia Balanced Fund and how it can help you balance risks and returns amid uncertain times.

Disclaimer

This document is not an offer or solicitation to purchase or sell units of the PineBridge International Funds – Acorns of Asia Balanced Fund (the “Fund”). Investors should read the prospectus and product highlights sheet of the Fund, available from PineBridge Investments Singapore Limited (the “Manager”) and its authorised distribution partners, for further details including the risk factors before investing in the Fund. The value of the units in the Fund and the income accruing to the units, if any, may fall or rise. Past performance may not be a reliable guide to future performance. Any prediction, projection or forecast on the economy, securities markets or the economic trends of the markets targeted by the Fund are not necessarily indicative of the future or likely performance of the Fund. An investment in the Fund is subject to risks, including the possible loss of principal amount invested. The Fund may use or invest in financial derivatives for efficient portfolio management and hedging purposes. Investments in the unit trusts are not deposits or other obligations of, or guaranteed or insured by the Manager or any of its related corporations. This document does not constitute investment advice or recommendation and was prepared without any regard to the specific investment objectives, financial situation or the particular needs of any person. Investors may wish to seek advice from a financial adviser before making a commitment to invest in units of the Fund. In the event an investor chooses not to seek advice from a financial adviser, the investor should consider whether the Fund is suitable for him. The portfolio holdings mentioned herein are subject to change and are not intended to be a recommendation to buy or sell a security or an indication of the performance for the subject company/issuer. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. Investors should not act on it without first independently verifying its contents. Any opinion or estimate contained in this document is subject to change at any time without notice. The Manager and its related corporations together with their respective directors and officers may have or may take positions in the securities mentioned in this documentation and may also perform or seek to perform broking and other investment services for the corporations whose securities are mentioned in this documentation as well as other parties. PineBridge Investments is a group of international companies that provides investment advice and markets asset management products and services to clients around the world. PineBridge Investments is a registered trademark proprietary to PineBridge Investments IP Holding Company Limited. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. Issued by PineBridge Investments Singapore Limited, located at One George Street, Unit 21-06, Singapore 049145 (Company Reg. No. 199602054E). All rights reserved.