MANILA, Philippines - With interest rates and spreads at historic lows, ATR KimEng Asset Management Inc. has launched a bond fund that seeks to provide total returns from income and capital appreciation by investing in fixed-income securities.
In a briefing yesterday, Deanno Basas, investment director for fixed income at ATR KimEng Asset Managemement, said the new fund, called ATR KimEng Total Return Bond Fund, is an open-ended mutual fund that aims to deliver superior risk-adjusted returns consistently over the long term.
“The fund seeks to protect downside and aims to avoid negative returns which we see in certain parts of the market cycle such as in 2008,” Basas said.
He said the Total Return Bond Fund is not bound to positioning relative to an index, giving investors more elbow room to adapt to market conditions or adjust their portfolio.
The fund shall invest in global and domestic debt securities issued by sovereign nations with a credit rating not lower than the Philippines of BB-, both in major and local currencies. The fund shall likewise invest in investment grade corporate securities denominated in major currencies.
Basas said maintaining returns in a predominantly low interest rate environment could pose a challenge especially if interest rates start moving up. He sees some upward pressure by the middle of the year as economies recover and normalize.
“Given the current investment landscape, the approach to managing fixed income portfolios need to evolve. The traditional “buy and hold” style of investing may not meet desired returns vis-a-vis risk requirements with the current level of yields,” Basas said.
“Active management of portfolios becomes more important specially with the risk of bond prices going down when interest rates start moving higher,” he added.
Basas said the Total Return Bond Fund is a good investment as it employs active management of key drivers – duration, credit and currency – to yield returns and control risk.
ATR KimEng Asset Management is a member of the ATR KimEng Group, which operates in the capital markets, insurance and real estate businesses.