Value Partners’ strong presence in the fixed income market is ultimately helping the company to deliver real value for its investors. In fact, this commitment has resulted in the company winning a Retail Top 100 award in the Other Bond category for the Value Partners Greater China High Yield Income Fund. It also picks up a Top ETF award in the Commodities – Precious Metals category for the Value Gold ETF.
Gordon Ip, Head of Fixed Income at Value Partners, who has over 20 years’ experience managing fixed income assets, explained that: “Our significant position in the market gives us the power to negotiate the best prices for our investors. This is helped by the strong synergy between our equity and fixed income teams.” Adding that: “The fixed income team can leverage on Value Partners’ knowledge and relationships in the region, so it gets first calls for many primary issues.”
The overall business analysis is executed by both teams, while the fixed income managers undertake balance sheet scrutiny, the equity desk supplies findings from its research.
Yield and Capital Appreciation
Ip turned to the Greater China High Yield Income Fund: “We aim to capture investment opportunities in Greater China’s high-yield bond market. This means we invest at least 70% in Greater China fixed-income securities, with our primary focus on US dollar-denominated offshore bonds.”
Ip also clarified: “There is the flexibility to invest up to a maximum of 30% of the fund in non-Greater China fixed-income assets. Furthermore, investment-grade bonds, convertible bonds, stressed and dislocated bonds can be added to provide further alpha.”
The Fund has a target to deliver a regular income of around 7-9% per annum, and the intention is to pay the majority of the income as dividend, and not to pay it out from capital. “We aim for both a healthy yield and capital appreciation for the portfolio,” elaborated Ip.
The investment strategy is best summarized as being overweight in lower-rated credit while focusing on under-researched credits, as well as aiming to find special situations and event-driven opportunities. Ip continued: “We also invest where we believe such debt securities are being traded at a significant discount to their underlying intrinsic values. Naturally, a very close and careful analysis of the creditworthiness of the issuer is always undertaken.”
Looking ahead, Ip believes there are strong reasons why investors should now consider the Asian market more favorable than the US one. “The general perception of the public towards Trump’s fiscal stimulus and the Federal Reserve’s hawkish stance are likely to send yields higher in the US, at least for the short term,” he explained. “To a certain extent, this may induce fund flows out of emerging markets into the US and lighten liquidity in Asia. However, Asia is still relatively more attractive as stability is good for the bond market.”
He went on to say: “Mainland Chinese investors are seeking dollar assets with a higher return than bank deposits. The abundant liquidity from mainland China to the Asian bond market serves as a positive technical factor. Amid the general hunt for yield, this will provide support to Asian credit markets, although they are likely not considered cheap.”
Demand Will Remain
Addressing concerns over the Asian credit cycle, Ip says: “We do not foresee a heightened default rate in Chinese offshore debt, as these issuers have the ability to roll over their debt. Even if there is a pullback in the market, there will still be money chasing those bonds.”
Turning to Chinese high yield bonds, and Ip mentioned that: “The restrictive measures on China’s property market are positive,” but warns, “it would be unwise for the government to let the sector decline too far given the contribution it makes to economic growth.”
No changes to strategy are planned: “To hedge against a potential inflationary pressure in 2017, we will maintain positions in energy, materials and industrial sectors.” However, Ip admitted that: “It will be much more challenging to deliver double-digit return again in 2017 due to the high base from 2016. We expect to generate returns more from alpha than beta, meaning that we will need to do a lot more groundwork and uncover opportunities in special situations, stressed and distressed credits which tend to be under-researched.”
A Physical Presence
Looking at Value Partners’ other success this year, the Company’s Value Gold ETF was set up to meet the needs of investors looking to invest in a ‘safe haven’ during uncertain economic times. Gold ETFs are gaining traction as investors become more aware of their benefits, such as enhanced trading liquidity, reduced security risk and lower costs.
The Value Gold ETF, established in 2010, was the first commodity ETF set up by Value Partners. What’s more, it is the first ETF listed in Hong Kong which is backed by physical gold stored in Hong Kong. The attraction for Asian investors is the protection afforded by Hong Kong’s relatively stable status, compared with other overseas locations. The ETF tracks the LBMA Gold Price, a widely used international benchmark for the daily gold price.
Multi Counters Arrangement
Standard Chartered Bank, the metal provider for the Fund, ensures that all gold bullion has a minimum fineness of 99.5% and is manufactured by certified refiners. The gold bullion currently held have a fineness of 99.9%, surpassing the aforementioned minimum requirement.
The Fund has a dual counter arrangement, which means that units are available for trading on the secondary market in Hong Kong dollars as well as the renminbi, which gives investors an additional channel of investment. BM
惠理在固定收益市場佔據領導地位，致力為投資者創造實際價值。事實上，憑着這份承諾，公司旗下的惠理大中華高收益債券基金在「其他債券」類別中贏得「零售100強」大獎。此外，惠理的價值黃金ETF亦奪得「商品 – 貴金屬」類別中之「同級最佳基金（ETF）」獎項。
惠理的價值黃金ETF於2010年成立，是公司首隻商品ETF。此外，價值黃金ETF亦是首隻在香港上市、有實金支持並庫存於香港的 ETF。香港的局勢較海外地區相對穩定，這對亞洲投資者而言是一大吸引之處。此 ETF追蹤倫敦金銀市場協會（LBMA）黃金價格，此價格是國際上廣泛採用的每日金價基準。