A Singapore dollar (SGD)-hedged US bond fund offering investors exposure to high-yielding US “junk” bonds but protecting them from potential losses from a weakening of the greenback against the SGD was launched by Allianz Global Investors (AllianzGI) last Monday. The AllianzGI US High Yield Fund will also give quarterly payouts amounting to a targeted annualised 7.2% a unit. The units are currently priced at $1.

“AllianzGI believes the SGD will strengthen against the USD. With the AllianzGI US High Yield Fund, investors can expect consistent performance while enjoying maximum protection against USD downside risks,” says Kwok Keng Han, deputy CEO of AllianzGI Singapore. The USD has depreciated more than 17% against the SGD over the past three years. Kwok adds that his new unit trust is the only SGD hedged product in the Singapore-registered high-yield bond fund space.

 

The fund is run by Douglas Forsyth, managing director and fund manager at Allianz Global Investors Capital, who has 18 years of investment industry experience and oversees assets of US$5.5 billion ($7.8 billion). “We are seeing a current buying opportunity in US high-yields, which are yielding 625 basis points above 10-year US Treasuries,” San Diego-based Forsyth told a media luncheon in Singapore last Monday. “Stronger-than-expected US economic recovery, firmer earnings environment and historically low interest rates put US high-yield bonds in a sweet spot.” Forsyth is targeting income coupon of 8% to 9% and annual capital appreciation of 4%. The initial investment for the fund is $1,000.