The Thai fixed income portion of the K Asia Fixed Income Fund (K-AFIXED) will be managed by Kasikorn, while Eastspring will focus on investing into Asian ex-Thailand local currency bonds and investment grade credits, according to a joint statement from both firms.
The fund is expected to launch between 21 to 27 March. It will focus on high-quality investment-grade Asian bonds and not just domestic bonds, Vasin Vanichvoranun, the firm’s executive chairman, said in the statement.
According to him, Asian local bonds with an A+ rating offered an annual year-on-year yield of 3.7%, which is higher than that of Thai corporate bonds that have an average rating of BBB and higher (2.7%).
The fund aims to achieve a target return between 3-4% per annum and also has a policy to pay dividends no more than twice a year, the statement added.
There is no limit for both onshore and offshore investments, according to the fund’s factsheet. In addition, the managers may invest up to 60% of the fund's net asset value in non-rated and non-investment grade fixed income. The average portfolio duration is not expected to exceed around five years.
The fund’s main selling agents are Kasikorn Bank’s private banking and affluent wealth management departments, the firm added.
Fixed income momentum
This is the first time that Eastspring is co-managing a fund with a local asset manager in Thailand, according to the firm.
Eastspring doesn't have an on-the-ground presence in Thailand, but it has existing clients in the country, including institutional investors. It has also partnered with other local asset managers on foreign investment funds, the firm said, without elaborating.
According to the firm, the partnership with K-Asset will allow Eastspring to introduce its fixed income capability to Thai investors.
K-Asset is one of the biggest asset managers in Thailand. As of end-February, it managed around $35bn in assets, according to the statement.
The launch of the fund comes at a time when Thai investors are pouring money into fixed income funds that invest in foreign securities. Foreign fixed income assets in Thailand were up 20% year-on-year to THB581.2bn ($16.6bn), according Rui Ming Tay, Singapore-based senior analyst at research firm Cerulli Associates.
Investment funds that invest in foreign securities have been popular in Thailand over the last few years, Tay said in a previous FSA interview. “It was more of a shift of demand toward foreign fixed income funds in 2016.”