Aberdeen Standard Investments (ASI) has opened its new emerging market local currency debt fund for Australian investors.
ASI has been investing in emerging market debt for more than 20 years. The company has a dedicated team of more than 40 professionals managing over $18 billion in the asset class for clients worldwide.
The fund is another product in its effort to be a leading provider of emerging market investment solutions. It is now available to investors with a minimum starting point of $20,000.
Brett Diment, ASI’s head of global emerging market debt said the new fund was designed to give investors access to a meaningful risk premium in a low-return environment at a time when many were looking for new sources of investment income.
Emerging market debt provided higher yields than Australian and global developed market bones, while EM currencies were the cheapest they had been since before the 2008 GFC, he said.
“In recent years we have seen increasing demand for EMD from investors in Europe and the US as local yields have fallen to historic lows. We are now seeing rates fall to similar lows here in Australia and many investors are now looking for alternative ways to generate investment income,” Mr Diment said.
“While EMD has traditionally not been on the radar screen of many investors, the attractive relative yields has seen more local investors seeking to understand the asset class and gain exposure. Emerging market local currency debt is an investment grade asset – the index is rated BBB.
“The new fund has been designed to help optimise exposure for Australian investors. The vast majority of the portfolio is invested in government bonds helping mitigate credit risk. Secondly this is a local currency fund and the traditional correlation between the AUD and EM currencies helps further mitigate risk for Australian investors.”
Brett Jollie, managing director for ASI’s Australian arm said that exposure to emerging market debt could enhance yield while providing diversification benefits.
He added that positive technical factors and an increasingly dovish US Federal Reserve should lead to larger flows into EMD in the next few years.
“This launch is an example of our ability to offer professionally managed solutions that are not easily replicated directly in the local market,” Mr Jollie said.
“Whether it be investment solutions, retirement income, ESG or asset allocation and advisory services, where possible, we want to work with local clients to deliver both local and global insights, research and solutions to meet their changing needs.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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