For many investors, the global financial crisis forced a reassessment of their approach to asset allocation and provided fresh impetus to enhance portfolio diversification.
At Aberdeen we believe that by examining relatively new asset classes we can find investment strategies that can improve portfolio diversification, as well potentially generate attractive returns.
Asian fixed income is one such asset class. Its emergence follows Asia’s rapid rise, which has been built on fiscal prudence and surplus savings (in stark contrast to the excess borrowing in the West). Such is this shift in capital ascendancy that the traditional investment order of developed and developing nations is being turned upside down.
Broadly, Asian fixed income is best understood as a range of opportunities – credit, currency and sovereign - and one, we emphasize, that requires both insight and skill to unlock.
Our approach to investing in the Asian fixed income markets is predicated upon the following investment philosophy;
We believe that Asian fixed income markets are not perfectly efficient. In order to maximize performance we believe we need to;
- focus on the entire regional investment universe;
- implement a diversified range of investment strategies covering markets, duration, yield curve and foreign exchange; and
- to be benchmark aware, not benchmark driven
Successful investment in the Asian region requires:
- a global perspective
- strategic fundamental macroeconomic research
- an understanding of the region’s political and policy influences, and
- an understanding of market technicals and market idiosyncrasies
We believe traditional risk management tools do not always work in the Asian markets and therefore we construct our own forward looking expectations of risk and volatility.