11.10.2011

Asia: The Positive Credit Story

11.10.2011
Terry Flanagan

Global asset manager Aberbeen Asset Management is making a big bet on Asia in its flagship fund, the Aberdeen Asia-Pacific Income Fund.

Scottish based Aberdeen Asset Management, with about 300 billion under management, managed for institutions and individuals, feels strongly about Asia.

Established in 1997, the firm’s flagship closed end fund, the Aberdeen Asia-Pacific Income Fund, managed a portfolio comprised of 10 different Asian countries—and those not often sought by other managers; from Korea, to Indonesia, to the Philippines.

“Asia is a positive credit story—founded on superior economic fundamentals, strong growth, attractive valuations, sound fiscal balances. The region is a savvy credit investment,” said Tim Sullivan, head of product development at Aberdeen.

The firm uses proprietary bottom up research to select investments.

As many other investors feel, Sullivan noted that a possible “slowdown” of some Asian economies, namely China, to a still, high growth rate of 9%, is still “significantly” impressive to the growth rate of the developing economies, such as Western Europe, which is collectively growing at just 1.5%.

The developed markets, though, still provide stability for Aberdeen’s Asia-Pacific Income Fund, mainly through Australia.

“We started off with Australian investments, because of the strong economic fundamentals, such as a 60% of debt to GDP ratio, which the other developed markets have not been able to maintain,” said Sullivan. “As long as Australia is able to maintain such positive levels, it’ll always be an anchor.”

Sullivan mainly advocates investing in Asian bonds, as a “natural hedge to the U.S. dollar’s market fluctuations.”

Aberdeen is solely an asset manager, now managing on five different continents and 30 different countries.

“We only manage assets for third parties, allowing us to focus solely on their needs, without conflicts of interest,” Sullivan said.

Apart from fixed income investing, the firm also employs teams to manage global equity, alternative and property funds.

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