Benefit from Asia’s income and growth potential with BlackRock Asian Tiger Bond Fund

  • IMPORTANT:

    • The Asian Tiger Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in the fixed income transferable securities of issuers domiciled in, or exercising the predominant part of their economic activity in, Asian Tiger countries. The Fund may invest in the full spectrum of available securities, including non-investment grade. The currency exposure of the Fund is flexibly managed.

    •  The Asian Tiger Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in the fixed income transferable securities of issuers domiciled in, or exercising the predominant part of their economic activity in, Asian Tiger countries. The Fund may invest in the full spectrum of available securities, including non-investment grade. The currency exposure of the Fund is flexibly managed.
    • The Fund may invest in debt securities that are subject to actual or perceived ratings downgrade. The Fund invests in certain emerging markets and may be subject to political, tax, economic, social and foreign exchange risks. An increase in interest rates may adversely affect the value of the bonds held by the Fund. The Fund may invest in non-investment grade and unrated bonds that may be subject to higher default, volatility and liquidity risks. The Fund invests in bonds issued or guaranteed by governments or authorities, which may involve political, economic, default or other risks.
    • The Fund is subject to currency risk, foreign investments restrictions risk, geographical concentration risk in Asian Tiger countries, liquidity risk, securities lending counterparty risk, currency conversion risk including Renminbi denominated Classes and contingent convertible bonds risk.
    • Class 6 Shares pay dividends gross of expenses and/or from capital at the Directors’ discretion. Class 8 Shares pay dividends gross of expenses and/or from capital at the Directors’ discretion and include interest rate differentials arising from share class currency hedging. Negative interest rate differentials may decrease the dividends paid. Paying dividends gross of expenses may result in more income being available for distribution; however these shares may effectively pay dividends from capital – may amount to a partial return or withdrawal of an investor’s original investment or capital gains. All declared dividends result in an immediate reduction in the NAV price of the share class on the ex-dividend date.
    • The Fund may use derivatives for hedging and for investment purposes. However, usage for investment purposes will not be extensive. The Fund may suffer losses from its derivatives usage.
    • The value of the Fund can be volatile and can go down substantially within a short period of time. It is possible that a certain amount of your investment could be lost.
    • Investors should not make investment decisions based on this document alone. Investors should refer to the Prospectus and Key Facts Statement for details including risk factors.

BlackRock Asian Tiger Bond Fund provides exposure to the vast income and robust growth opportunities underpinning Asia’s dynamic economies.  The fund invests in USD bonds across Asia, allowing you to capitalise on the strong Asian macroeconomic recovery and robust corporate fundamentals, to help achieve  potential attractive income and capital appreciation.

Why invest in BlackRock Asian Tiger Bond Fund?

The fund invests predominantly in Asian USD Credit across both the investment grade and high yield space with an overall investment grade rating.
A Core “Credit+Plus ” Asian Credit Strategy
A Core “Credit+Plus ” Asian Credit Strategy
Credit focus complemented by opportunistic rates and currency allocation
Finding Opportunities across APAC
Finding Opportunities across APAC
Has the flexibility to invest in fixed income across the Asian region in the search for stable income.
Robust Platform and Experienced Team
Robust Platform and Experienced Team
An integrated Asian fixed income team with expertise across currency, rating and liquidity spectrums.
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4.9 Percent

Annualized Yield – A6 USD

Latest (3/31/2021) annualized yield (A6 share class aims to pay a dividend on a monthly basis. Dividend Payment is not guaranteed. The Fund may effectively pay dividend from capital. See important information 4)

Latest 6 months dividend table – A6 USD

Month Annualized Yield
3/31/2021 4.92%
2/26/2021 4.86%
1/29/2021 4.80%
12/31/2020 4.78%
11/30/2020 4.83%
10/30/2020  4.90%

A6 share class annualized yield = (Dividend rate / ex- date NAV) * (12*100). Dividend yield is not guaranteed, and is not indicative of the return of the Fund. Past performance is not a guide to future performance. Investors may not get back the full amount invested. A6 share class inception date: 02-Apr-2012.

Supportive corporate credit fundamentals & positive rating trend in Asia

1. Asian credit’s improving fundamentals and resilient credit metrics are supportive for the region. Asia credit metrics were largely intact in 2020 despite the demand slump caused by Covid. Net debt had decreased and EBITDA/interest expense improved on lower borrowing cost.

Corporate credit metrics in Asia have improved

 

Source: JPM Asia USD Statistical Chart Book 2H20, 30 Jun 2020. The EBITDA / interest expense ratio is used to assess whether a company is at least profitable enough to pay off its interest expenses.

2. Asian USD credit has the ability to diversify a fixed income portfolio while generating a relatively higher risk-adjusted return than its peers, supported by a higher Sharpe ratio.

Supportive fundamental

 

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results. Source: Bloomberg, 31 March 2021. Asian USD Credit: JPM Asian Credit Index; Global IG Corp: Barclays Global Corporates (USD Hedged); Global HY Corp: Barclays High Yield Corporates (USD Hedged); EM USD Sov/Quasi Credit: JPMorgan Emerging Market Bond Global Diversified Index; EM Local Currency Bonds: JP Morgan GBI-EM Diversified. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

Growth of Hypothetical 10,000 performance since launched in 1996

Competitive performance

 

Past performance is not a guide to future performance. Investors may not get back the full amount invested. Performance is calculated based on the calendar year end, NAV-to-NAV with dividend reinvested (share class: A2 (USD)). Performance figures are calculated net of fees. Inception date: 2 February 1996. 5 years performance: YTD: -1.63%, 2020: 6.58%, 2019: 11.31%, 2018: -3.15%, 2017: 6.72%, 2016: 4.70%. Data as of end March 2021.
These figures show as a percentage change of NAV of Share Class of the Fund based on a hypothetical $10,000 investment in the Share Class. Performance is calculated in the relevant share class currency, including ongoing charges and taxes and excluding subscription and redemption fees, if applicable.

 


 

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Your Top 6 Questions Answered

Investors are increasingly looking to Asian fixed income and the BlackRock Asian Tiger Bond Fund to capture higher yield and to diversify away from global holdings.  We answer the top 6 questions commonly asked by investors when considering their allocation.

  • Central banks around the world are expected to maintain low interest rates and accommodative policies to continue to support economic recovery. With this backdrop, assets that can generate high, stable income should be appealing to global investors. BlackRock Asian Tiger Bond has the flexibility to capture income by allocating across Asian USD Credit and the broader Asian Fixed Income space based on evolving market opportunities. Additionally, income acts as a buffer against market volatility that could negatively impact bond prices.

  • Asian credit may be a good complement to US credit in the current market condition.  In general, at similar credit rating profile, yields for Asian Credit would be higher while duration risks are lower. In the current environment, taking lower duration risk is important to keep exposure to broader market risk within manageable levels.

     

    Yield Average credit rating Duration
    Asian Investment Grade 2.10% A- 5.50
    US Investment Grade 1.13% AA 6.03
    Asian High Yield Credit 7.46% B+ 2.74
    US High Yield Credit 4.68% B+ 3.78

    Source: BlackRock, Bloomberg, end November 2020. Asian Investment Grade refers to JPM Asian Credit IG Index; US Investment Grade refers to BBG Barc US Agg Index; Asian High Yield Credit refers to JPM Asian Credit non-IG Index; US High Yield Credit refers to ICE BAML US High Yield Index. Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

  • We believe global monetary policy is on an accommodative trajectory. This benefits Asian Credit because:

    • US treasury yields are a component of Asian Credit yields, so when they go lower/are stable, it supports price returns.
    • Lower rates in developed markets makes emerging market assets more attractive for income-oriented investors.
    • An accommodative Fed supports investor sentiment towards emerging market local markets – an area that the BlackRock Asian Tiger Bond Fund tactically invests in.
  • Asian credit should continue to attract global capital given the massive need for income and the scarcity of higher-quality bonds that can meet the demand. Because of the dovish pivot by central banks in the past year, interest rates are lower across the board, with 25% of the Bloomberg Barclays multiverse having negative yields. This, along with other long-term factors such as ageing demographics, continues to drive the global search for yield, supporting Asian Credit.

    *Source: BlackRock, as of end November 2020

  • Asian bond investors are mostly domestic (In the past few years, 70-80%* of investors in Asian credit have been from Asia), meaning a stickier investor base less likely to redeem during drawdowns.

    Compared to other global fixed income asset classes, Asian Credit has lower exposure to sectors that have been vulnerable to the volatility seen in 2020, including oil & gas, transportation and hospitality. This has made the asset class more resilient through the periods of selloffs and resulted in a lower default rate.

    Asian credit# and the BlackRock Asian Tiger Bond Fund have returned positive performance in 8 of the past 10 years.

     

    2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
    BlackRock Asian Tiger Bond Fund (%) 13.1 1.9 14.2 -3 8.2 2.3 4.7 6.7 -3.2 11.3 6.5
    Benchmark# (%) 10.6 4.1 14.3 -1.4 8.3 2.8 5.8 5.7 -0.8 11.3 6.3

    *Source: JP Morgan, Asia Credit Outlook and Strategy 2021

    #JP Morgan Asian Credit Index
    Source: Bloomberg, 31 December 2019
    BlackRock Asian Tiger Bond Fund A2 USD. Inception date: 2nd February, 1996. Data as of end December 2019.
    Past performance is not a guide to future performance. Investors may not get back the full amount invested. Performance is shown on a NAV to NAV price basis with income reinvested for A2 USD share class. Fund performance figures are calculated net of fees. Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

  • The inclusion of Chinese onshore bonds into the FTSE World Government Bond Index scheduled in October 2021 marks the further opening-up of Chinese markets to international investors. Most analysts expect other global index providers to follow suit, bringing significant inflows to the domestic bond markets. The BlackRock Asian Tiger Bond Fund will benefit from its flexibility in being able to invest up to 20% in onshore CNY Chinese bonds. These bonds not only provide higher real yields but also serve as a hedge to volatility in the offshore USD space since the two markets have a low correlation.