Managed by State Street Global Advisors
Asian fixed income is more important than ever as investors continue to search beyond traditional income and yield sources.
How will Asian bond markets fare? Kheng Siang Ng, Asia Pacific Head of Fixed Income at State Street Global Advisors, talks about the outlook and what key drivers and risks to watch out for. View the transcript.
For many investors, the gateway to Asian bonds are broad global or emerging markets fixed income funds. But to fully capture the potential of Asia’s growth story, investors may consider specifically targeting local currency sovereign bonds for diversification and potentially higher returns.
Matthew J. Arnold, CFA, Head of ETF Strategy & Research APAC at State Street Global Advisors, shares his take on the benefits of adding a strategic allocation to Asian bonds in your portfolio. View the transcript.
Capitalize on Asian growth trends
Potential higher yields
Currency appreciation potential
1 Source: SSGA, as of 31 January 2017.
2 The ongoing charges figure is based on expenses for the year ended 31 December 2015. This figure may vary from year to year. The ongoing charges figure is calculated by adding the applicable charges and payments deducted from the assets of PAIF and then dividing by PAIF’s average net asset value for the financial year.
An ETF is a basket of companies or securities that you can buy and sell on stock exchanges just like any other shares. ETFs aim to track the performance of a specific market or strategy in an efficient, low-cost way.
An ETF is similar to a managed fund, or unit trust, but trades like a share throughout the day. ETFs combine the features of index funds with individual securities:
Diversification ETFs offer one of the easiest ways to diversify a portfolio. By virtue of being index investments, ETFs offer exposure to a particular market segment, helping to protect against the risk of a select number of individual securities hurting an investor’s overall portfolio performance. It’s important to remember that diversification does not ensure a profit or guarantee against loss.
Lower Fees and Expenses Passively managed ETFs typically have low management fees and operating expenses.
Trading Flexibility ETFs trade all day long, so investors can lock in the market value of the ETF anytime during the trading day. Because ETFs trade like stocks on an exchange, a wider range of techniques (stop loss and limit orders) can be used to take advantage of anticipated market movements. It’s important to keep in mind that frequent ETF trading, which typically occurs through a broker, can significantly increase brokerage commissions potentially washing away any savings from low fees or costs.
Transparency Investors have all the information they need to make informed investments — no strategy drift or black boxes to decipher. With ETFs, you know precisely which securities the ETF holds and what you’re invested in — there is no need to wait for the end of the quarter to review the fund’s holdings.
PAIF: Easy, Cost-Efficient Access to Asian Bonds
PAIF is Asia’s first bond ETF and was launched as part of an important initiative by 11 central banks in Asia Pacific to deepen the region’s bond markets. Benchmarked to the Markit iBoxx ABF Pan-Asia Index, PAIF invests in the sovereign and quasi-sovereign local currency bonds of eight Asian major economies. It provides easy, lower cost market access to Asian bonds for investors around the world.
Hon Cheung, Chief Official Institutions Investment Strategist at State Street Global Advisors, takes us through the key features and benefits of PAIF. View the transcript.
Lowest cost among its peers
Intelligent indexing for more balanced portfolio
Move your mouse over each to learn more.
With ongoing changes over a year at 0.19%2, PAIF is a particularly cost-effective vehicle for a range of investors, large and small.
PAIF holds mainly sovereign bonds from eight countries in Asia (including China) across over 300 securities1.
PAIF is currently the largest fixed income ETF in the region, with total assets of about US$3.8 billion1.
PAIF is an early example of smart beta in fixed income. Rather than using a traditional market capitalization methodology, PAIF adopts a modified weighting approach – country allocations are modified depending on credit ratings and investability – and produces index allocations that are more balanced, diversified and investable.
PAIF was launched in 2005, as a component of the EMEA (Executives' Meeting of East-Asia and Pacific Central Banks) Group's initiative to further develop the bond markets in Asia.
Highly diversified portfolio
fixed income ETF in Asia ex Japan
First ETF covering Asian local currency bonds
Retail investors may buy and sell units of PAIF on the Stock Exchange of Hong Kong (SEHK) through brokers in the same way as they may trade shares in companies listed on the SEHK. Investors will need to pay brokers' commissions, trading fee, stamp duty and other levy associated with dealing on the SEHK. These amounts are subject to the investor's individual agreement with, and paid directly by the investor to, the investor's broker or other service providers of the investor.
For more information, please consult your stock broker or financial advisor.
Institutional investors can trade on the Stock Exchange, Over-The-Counter (OTC) or via Creation/Redemption mechanism on the primary market. For the primary market, PAIF consists of approved Authorized Participants, mostly including the market makers with the capacity and authority to create and redeem PAIF in accordance with demand.
© 2017 State Street Corporation. All Rights Reserved.
All the information contained in this website is from SSGA and as of date indicated unless otherwise noted.
This website is issued by State Street Global Advisors Singapore Limited ("SSGA" or the "Manager", Company Reg. N0: 200002719D, regulated by the Monetary Authority of Singapore) and has not been reviewed by the Securities and Futures Commission of Hong Kong (the "SFC"). It may not be reproduced, distributed or transmitted to any person without express prior permission. This website and the information contained herein may not be distributed and published in jurisdictions in which such distribution and publication is not permitted.
Nothing contained here constitutes investment advice or should be relied on as such. The value of PAIF and the income from it, if any, may fall or rise. Past performance of PAIF is not indicative of future performance. The prospectus for PAIF is available and may be obtained from the Manager and downloaded from PAIF's website: www.abf-paif.com*. The semi-annual distributions are dependent on PAIF's performance and are not guaranteed. Listing of PAIF on the SEHK does not guarantee a liquid market for the units and the Fund may be delisted from the SEHK. PAIF may use or invest in financial derivatives.
Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates rise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.
Diversification does not ensure a profit or guarantee against loss.
In general, ETFs can be expected to move up or down in value with the value of the applicable index. Although ETFs may be bought and sold on the exchange through any brokerage account, ETFs are not individually redeemable from the Fund. Investors may acquire ETFs and tender them for redemption through the Fund in Creation Unit Aggregations only, please see the prospectus for more details.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns. Frequent trading of ETF's could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
The Markit iBoxx ABF Pan-Asia Index referenced herein is the property of Markit Indices Limited and is used under license. The PAIF is not sponsored, endorsed, or promoted by Markit Indices Limited or any of its members.
State Street Global Advisors Asia Limited, 68/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. Telephone: 852 2103-0288. Facsimile: 852 2103-0200. Web: www.ssga.com*
*This website has not been reviewed by the SFC.
IBGAP-3400 Exp. Date: 02/28/2018