Asia: What to do about bonds?
Summary
Many of us are keen to invest in Asian bonds - but don't quite know where to turn to, given the relative dearth of paper. Step in a relatively liquid ETF that can help to solve your problem. I have not invested in them, just so that you know, but I thought it useful to point this instrument out.Topics Covered
- Going long of Asian bonds
- How to make money off this
Background
1. Going long of Asian bonds
If you want to have some exposure to Asian government-guaranteed bonds, try this ETF that is quoted on our Hong Kong Stock Exchange. to quote from Bloomberg,
"ABF Pan Asia Bond Index Fund is a unit trust established in Singapore. The Fund's objective is to provide investment results that correspond closely to the total return of the iBoxx ABF Pan-Asia Index, before fees and expenses. The Fund invests in debt obligations issued or guaranteed by the governments of China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore and Thailand."
According to Bloomberg, it has assets of USD 1.5 billion, so it is not so small. Reading the fine print of the newspaper ad, this ETF is USD-denominated but is not guaranteed itself by any of the eight governments whose bonds are invested in.
With inflation really not a problem at all, you might want to consider at least researching this ETF. With people getting leerier of US Treasuries, Asian bonds might provide a small alternative. If this is correct, the current toppiness of said ETF should reverse and bond prices of non-USD paper should climb.
2. How to Make Money Off This Idea
- Always consult your financial adviser first.
- Have a look at this ETF, which is quoted as 2821:HK
- Currently some technicals look bearish on this ETF, so you might want to wait until they look more attractive.
