Invesco has launched a fixed income mutual fund that provides investors direct exposure to the Belt and Road (B&R) investment theme.
The fund is registered under restricted registration in Singapore available only to high-net-worth investors, and Hong Kong for retail investors, Citywire Asia has learnt.
The fund is a thematic portfolio and invests primarily in government bonds of developing countries along the B&R region and non-government bonds of both developed and developing countries along the B&R region.
Launched by the Chinese government in 2013, the Belt and Road initiative aims to promote the land and sea connectivity along Asia, Europe, Middle East, and Africa and their adjacent seas.
The project has since expanded to include 100 signed cooperation agreements with 86 countries and international organizations
‘The growing outward direct investment of China is expected to flow to B&R countries, which leads to stronger economic co-operations and productivity growth in the B&R region,’ said Ken Hu, chief investment officer, fixed income, Asia Pacific.
‘The solvency and liquidity of most of the B&R countries will tend to improve, paving the way for an upgrade trend of their sovereign credit ratings.’
Invesco predicts that $150-200 billion will be invested annually from China into B&R countries over the next five years.
Ken said with rising economic activity in the B&R region, both government and non-government issuers will need to issue more bonds for financing.
‘As such, selective new issues of bonds in the B&R region will provide higher yields than bonds with similar credit ratings and maturities in traditional bond markets,’ he said.