Global high yield bond funds are seeing more redemptions in the last six months, while short duration funds have more subscriptions, says Kevin Mathews, head of global high yield at Aviva Investors.
Some investors are switching from global high yield bond fund to short duration high yield bond fund, he told Citywire Asia.
Due to the shift of the high yield curve, investors can get almost the same yield in short duration as they do in global high yield, Mathews said.
Investors are not leaving the regular global high yield fund because of its performance or beta but merely to allocate away from longer duration fixed income instruments and into other place, he added.
In the past, Mathews said the group’s high yield bond fund has always attracted higher interest than short duration by the factor of five to ten times, given that short duration was not popular previously.
However, this is set to change, with growing concerns on interest rates hike. Within the global high yield space, there’s a big focus on interest rates.
The focus now is on what investors could invest to protect themselves from rising rates, and these could be short duration fund or floating rates notes, to name a few, he said.
Aviva offers the Aviva Investors Global High Yield Bond fund and Aviva Investors Short Duration Global High Yield bond fund to investors in Asia.
Incepted in 2008, the Global High Yield Bond fund invests in the entire developed global high yield markets and has about $4.5 billion in assets.
Meanwhile, the Short Duration Global High Yield bond fund was incepted in 2012 and has about $1 billion in assets.
Aviva’s short duration fund invests mainly in high yield bonds with an average maturity of less than five years that are issued by corporations anywhere in the world, and primarily in North America and Europe.
Although Asian investors still hold more in regular global high yield funds, there’s an increased appetite in short duration funds recently, Mathews said.