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

  • IMPORTANT INFORMATION:

    i. 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.

    i. 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.

    ii. 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.

    iii. 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.

    iv. 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.

    v. 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.

    vi. 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.

    vii. 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 (IG) and high yield (HY) 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.

Benefits of BlackRock Asian Tiger Bond Fund

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5.4% p.a. (A6 USD share class as of 31 March 2022)
Latest annualized yield as of 31 March 2022. (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 iv)1
4.9% p.a. (A6 USD share class as of 30 June 2021)

Latest 6 months dividend table – A6 USD

Month Annualized Yield
3/31/2022 5.41%
2/28/2022 5.26%
1/31/2022 5.09%
12/31/2021 4.90%
11/30/2021 4.87%
10/29/2021 5.34%

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.

Improving fundamentals in Asian Credit

China property refinancing issues, rising interest rates and the Russia-Ukraine conflict have given rise to a challenging technical backdrop this quarter, however Asian credit has stayed mostly resilient from a fundamental standpoint. IG corporates have brought their balance sheets back to pre-COVID levels, are still seeing more upgrades than downgrades and do not face significant fallen angel risk after India’s sovereign ratings got reaffirmed. HY corporates have seen more downgrades but concentrated in the China property sector, with other sectors/countries having managed to keep their ratings largely intact. Asian credit metrics are predominantly on a path of improvement, except for a few sectors like China property where more discerning credit selection is needed. At a broader macroeconomic level, growth in Asia is expected to be more robust than most other regions, following a weaker 2021 on the back of Covid lockdowns.

Supportive technicals

This recent selloff has made valuations attractive, with rising rates and wider spreads having pushed all-in yields to multi year highs. This could potentially help make technicals more supportive moving forward due to income-seeking investors. While foreign interest in Asian credit has risen in the past two years, primary ownership sits with regional investors which increases the stickiness of the investor base and a willingness to resume risk-taking after a volatile period.

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: 2022 YTD: -8.21%, 2021: -7.41%, 2020: 6.58%, 2019: 11.31%, 2018: -3.15%, 2017: 6.72%. Data as of end March 2022.

 


 

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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.

  • Overall growth expectations in Asia remain positive in 2022 despite uneven recoveries across countries. Nonetheless, risks of slow reopening or policy missteps means that country/sector selection will remain critical. BlackRock Asian Tiger Bond has the flexibility to capture income by allocating across Asian US dollar credit and the broader Asian fixed Income space based on evolving market opportunities. Tightening global liquidity has increased volatility in global risk asset classes, increasing the importance of nimble strategies with a focus on high and stable income.

  • 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.

    Source: BlackRock, 7 April 2022. Asian Credit 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; EM Quasi/ Sov refers to JPM EMBI Global Diversified 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.

  • Asian credit bond prices are driven by two main factors: changes in credit spreads and changes in risk free rates. Being a USD denominated asset class, the risk-free rate in this case refers to US Treasury (UST) yields.

    A measure of the sensitivity of an asset class or fund to changes in interest rates is duration. The longer the duration, the more sensitive a portfolio of bonds is. In the BGF Asian Tiger Bond Fund, we have been structurally short USD investment grade duration (the segment most sensitive to UST yields) relative to the broader Asian Credit market. This means that the Fund is less vulnerable to a rise in UST yields relative to the broader Asian Credit market. Nonetheless, we manage this position tactically amidst the evolving interest rate landscape using our proprietary models.

  • Asian credit should continue to attract global capital given the massive need for income and the scarcity of higher-quality bonds that can meet this demand. Even with the increasing hawkishness of developed markets’ central banks, nominal and real rates in Asia remain significantly more attractive compared to developed markets. Macroeconomics and exchange rates in Asia also remain on a stable footing relative to other parts of developed markets and rest of emerging markets. This offers an attractive return potential for long term investors. This, along with other long-term factors, such as ageing demographics, continues to drive the global search for yield, supporting Asian credit.

    • The investor base for Asian bonds is primarily domestic investors (in the past few years, 70-80%* of investors in Asian credit have been from Asia), which makes it less likely to see redemptions during drawdowns.
    • High income serves as a cushion to volatility in price returns.

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

  • The start of inclusion process of Chinese onshore bonds into the FTSE World Government Bond Index in October 2021 marked another step in 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 reniminbi-denominated 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.

To find out more, speak to your financial advisors

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