VAM Funds unveils Asia fixed income product

VAM Funds has launched the Luxembourg-domiciled VAM Asia Fixed Income fund to allow investors to exploit opportunities in the Asian fixed income market where yields on investment grade bonds are averaging 6% annually.

Managed by Hong Kong-based investment house, Enhanced Investment Products (EIP) on VAM's behalf, the fund will invest across Asia including Japan.

The portfolio will hold 20-50 names from a universe of about 650 bonds. The current portfolio yields in excess of 6% net of costs. Dividends generated can be either paid out or accumulated in the investment.

The Ucits III-compliant fund and sub-fund of VAM Funds (Lux Sicav), is available in US dollar, sterling and euro share classes for investors with a minimum investment of $10,000, £5,000 or €8,000. It has an annual management charge of 1.2%.

Michael Hunt, managing director of VAM Funds, says the fund is a straightforward investment proposition.

"In current conditions we are finding that investors appreciate fund or product offers with a straightforward structure, an absence of complex financial engineering and the reliance on a good investment proposition and the skill of an experienced manager," he says.

Toby Bland, CEO of EIP, says Asian fixed income is a growing market and the fund offers a solution for low volatility with a medium return, given the current demand for income-producing assets.

"Asian investment grade corporate bonds offer value for investors because of their relatively wide spreads over US treasuries and low risk of default, and are likely to deliver more stable future returns," he says.

Bland believes Asian banks are highly liquid and able to support local corporates as they did not invest in complex financial products, which contributed to the global financial crisis.

"Unlike countries in the West which have built up large debts to the rest of the world Asian countries have substantial savings. This leaves them better placed to repay any maturing debt."