Strategy
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Asia Credit

Focuses on generating total return by investing in mainly USD-denominated fixed income securities issued by sovereigns, quasi-sovereigns, supranationals and companies in the Asian region.
Investment Philosophy

The Asia Credit strategy is one of the key strategies managed by our Asian Fixed Income team at Nikko AM. It focuses on generating total return from both capital appreciation and income by investing in mainly USD-denominated fixed income securities issued by sovereigns, quasi-sovereigns, supranationals and companies in the Asian region. The investment philosophy and strategy of the Asian Fixed Income team is well-tested over time and remains stable.

Our investment process seeks to deliver returns through multiple sources of alpha, utilising both top-down and bottom-up strategies. The research approach utilises our proprietary Fundamental, Valuation and Technical (FVT) framework to distil the top-down and bottom-up perspectives from a multitude of macro-economic factors and issuer- and issue-specific characteristics, to add value within the defined levels of risks and constraints, using both qualitative and quantitative techniques. Most important in our fundamental analysis is our Internal Credit Rating (ICR) model, which has been time and stress tested for its robustness since inception in 2006. Our ICR assesses quantitative and qualitative aspects of each issuer independently of external credit rating agencies. Environmental, Social and Governance (ESG) factors also form an important aspect of the credit analysis. Our proprietary Internal Credit Rating (ICR) model, conceptualised and developed by our Asia Credit team, is the first pillar in our credit research process.

For more details on our investment philosophy, Research and ESG framework and investment team, please visit the Asian Fixed Income strategy page.

Opportunities in the Asian Bonds Market

Asia is one of the fastest growing regions in the world, a compelling argument to invest in Asian bonds. The growth of Asia ex-Japan economies, underpinned by China’s ascent, has significantly outpaced that of developed economies. In 1998, the region’s share of global gross domestic product (GDP) was 9%, and has since increased to about 45%1, as of May 2022. We expect the depth, breadth and diversity of Asian bond markets to increase further. In our view, fund flows within Asia (a requirement for more diverse funding) and increasing issuer sophistication, are factors that will fuel these characteristics.

Flagship Strategy with Established Track Record

Our Asia Credit strategy is one of our flagship fixed income strategies. Since its launch in 2009, the team has accumulated valuable experience from managing the strategy through various market cycles.

Over the years, the ICR has gone through various enhancements (for example, the integration of ESG factors) to ensure that it remains well-aligned to the changes in the investment environment.

Active Management Opportunities

With a diverse and growing investment universe in Asian bonds, our highly experienced Fixed Income team manages a wide range of active Asian fixed income portfolios. They are present on the ground and understand the opportunities and risks in Asia. It is our belief that there are great opportunities for specialist investment managers in the dynamic Asian market.

Sub-strategies within the Asia Credit spectrum of the bond market managed by our team include Asia Credit-Investment Grade strategy, Asia High Yield strategy, Composite Asia Credit strategy, Short Duration Asia Credit strategy.


1 World Economics: https://www.worldeconomics.com/Thoughts/The-Future-is-Asian.aspx

Important Information

The funds mentioned are Singapore registered funds approved for sale or purchase in Singapore. By proceeding, you are representing and warranting that you are either resident in Singapore or the applicable laws and regulations of your jurisdiction allow you to access the information.

The information on this website is not intended to be an offer, or a solicitation of an offer, to buy or sell any product or service to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction.

This website may contain links to the website of certain overseas affiliates of Nikko Asset Management Asia Limited (“Nikko AM Asia”). However, providing such links should not be considered as offering or solicitation by Nikko AM Asia of any product or service of its affiliates to any person.

This website is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. The mention of individual securities, sectors, regions or countries within this website are for illustration purposes only and does not imply a recommendation to buy or sell. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in funds are not deposits in, obligations of, or guaranteed or insured by Nikko AM Asia.

Past performance or any prediction, projection or forecast is not indicative of future performance. The Funds or any underlying funds may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the Funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Funds, which are available and may be obtained from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before deciding whether to invest in the Funds.

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