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.
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