The fund house said it will use the license for its Luxembourg-domiciled Schroder International Selection Fund Asian Bond Absolute Return.
“Demand from our clients for RMB-denominated bonds has remained strong over the years and will continue to grow. This supports our view that Chinese yields are attractive with low inflation and a stable currency,” said Rajeev De Mello, head of Asian fixed income.
Schroders Singapore will be applying to the State Administration of Foreign Exchange for a RMB1bn ($161m) quota for the fund.
Launched in 1998, the Asian Bond Absolute Return fund with $737.5m in assets under management seeks to provide an absolute return of capital growth and income primarily through investment in a portfolio of bonds, fixed and floating rate securities issued by governments, government agencies, supra-national and corporate issuers in Asia (excluding Japan).
As per the latest available portfolio, government bonds account for 54.5% of the assets while corporate bonds have a 23.6% of the corpus. Korean treasuries and Singapore and Indian government bonds feature among its top holdings.
Schorders said its fixed income team already manages around RMB2.4bn worth of offshore RMB investments.
A look at the performance of Schroders Asian Bond Absolute Return Fund since inception in 1998, against its benchmark: