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NEWS UPDATES Asean Affairs    4 September  2012

Asian bonds outshining American paper


US corporate and treasury bonds have long been regarded as being among the safest in the market, given the deep and well-developed American markets.

But for Schroders' Asian bond fund manager Rajeev De Mello, Asian bonds now present a more attractive option.

De Mello, 46, notes that in terms of growth potential and prospects, Asian companies are outshining their American counterparts.

"The growth is here. While big US multinationals do have exposure to the Asian markets, those firms that are focused on the US domestic market are unlikely to do as well as the Asian-focused firms," he said.

"So in terms of ability to pay out a cash flow and better business prospects, Asian firms are safer."

Mr De Mello is in charge of several Asian fixed-income funds, including the Schroders' Asian Bond Fund and the Asian Premium Bond Fund.

The Asian Bond Fund (ABF), which is the big brother of the two, started in 1998. The size of the fund is about US$1 billion (S$1.25 billion) while the Asian Premium Bond Fund (APBF), launched in 2006, has a size of about US$100 million.

Both funds have done relatively well this year.

The ABF posted a return of 4.88 per cent, including any dividends re-invested, for start of the year up to July 31.

The Asian Premium Bond Fund, which aims to beat the Central Provident Fund Ordinary Account rate of 2.5 per cent, achieved 5.46 per cent for the same period.

De Mello started out as a trader in 1987 before venturing into fund management. He moved to Asia in 1998 and was last at Western Asset Management before joining Schroders last year.

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