Amundi, the largest European asset manager, launches Amundi Funds – Asia Income ESG Bond (“the Fund”). The Fund invests across all Asian fixed income segments with a focus on both credit and local rates markets. Diversified across corporates and sovereign issuers, the Fund will target high income generation with an optimised risk return profile. It will also employ a robust ESG framework to reduce extra-financial risk while also seeking ESG opportunities. The Fund is classified SFDR Article 8*.
The Fund will actively invest in a broad, diversified investment universe across local and external debt, using active currency management. The Asian bond universe comprises of 10+ sovereign and quasi-sovereign issuers and over 500 corporates across 15 countries.
The Fund will be managed by Joevin Teo, Head of Asian Fixed Income and the EM Debt team.
Amundi’s Emerging Markets team manages over €38.6 billion of assets and is made up of both Fixed Income & Equity specialists. This cross-asset set-up enables the investment teams to capture a wide breadth of emerging markets investments and better understand the full cost of capital, helping to unearth and generate unique investment opportunities.
Asia – where we believe the growth will come from
Today, Asia is one of the most dynamic regions offering a vast number of investment opportunities in a highly diversified* and maturing market. We are observing a marked shift in investment focus from the West to the East, which we believe will drive further foreign investment flows across the region and higher yield potential than Developed Markets corporate bonds. The top five Asian countries – China, India, South Korea, Indonesia and Thailand, have seen their contribution to world GDP growing over the last two decades. Asia’s share of world GDP has increased to almost 30%, from under 10% in the early 2000s. It is still under-represented in indices today.
Trends in Asian Green, Social, and Sustainability (GSS+) Bond Issuance
The GSS+ bonds market in Asia is growing rapidly, with the region responsible for issuing over 50% of emerging markets GSS+ bonds. The year 2021 was a record year in issuances (representing a 400% increase in green bond issuance compared to 2020), with financial corporates ($101bn), industrials ($32bn), government ($27bn) and utilities ($20bn) being the most active sectors issuing bonds.
ESG Considerations
The Fund aims to mitigate Environmental, Social, and Governance (ESG) risks and seeks to capture a wide range of investment opportunities by maintaining a minimum extra financial analysis coverage of 90%, as well as a minimum allocation to GSS+ Bonds. Furthermore, the investment team will measure and monitor the portfolio’s carbon intensity per euro million of sales and ensure this amount remains below the investment universe average at all times. The investment team will also monitor and report on additional ESG KPIs covering social and governance themes. utilizing Amundi’s proprietary tool – ALTO* Sustainability. This will enable the investment team to seamlessly monitor the ESG risks and opportunities at the issuer level and allow Amundi’s teams to engage with issuers on targeted environmental and social themes.
Yerlan Syzdykov, Head of Emerging Markets at Amundi, said
“Emerging Markets are expected to grow faster than Developed Markets, with Asia taking the lion’s share of this growth. As we navigate this ongoing market regime shift to a higher rate environment, the increased volatility and uneven repricings offer what we believe to be great investment opportunities for active and flexible asset managers like Amundi. With a growing demand for green and social bonds in the region, the appeal for Asian bonds is strong and we are delighted to offer investors in Europe and Asia access to this maturing and increasingly diversified* market.”
These sub-funds are available within the Amundi Funds SICAV and are currently registered in the following countries: Austria, Belgium, France, Hong Kong, Germany, Italy, Luxembourg, Netherland, Spain, Singapore, United Kingdom.
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