Premium China Funds Management plans to launch an Asian corporate debt fund within months, the company’s executive director said.
“We are working on it now and we will launch it in about two months,” Simon Wu told InvestorDaily.
“We will seed it with our own money. That’s how confident we are,” Wu said, adding the seed capital would total $3 million to $4 million.
He said the Premium Asia Income Fund would have about one-third the volatility of equities and would aim to return 10 to 12 per cent a year.
“If you invested in Australian equities over the last 15 years, and didn’t move your money in or out of the market, your return would have been 5.17 per cent,” he said.
He said Premium fund managers knew Asian companies well.
“If we’re investing in their equities, we’re confident in their debt,” he said.
Wu said corporate debt would make up the majority of the fund, but it would also invest in convertible notes and would produce income, which would be distributed quarterly.
“It will be fully hedged back to the Australian dollar, so we’re not taking any foreign-exchange risk,” he said.
He added that China made up about two-thirds of the Asian market, and the fund would reflect this weighting.
Wu said consumers in China were driving retail growth there of 18 to 20 per cent, and the consumer-led demand was creating a stimulus of about $400 billion a year.
“Many Asian countries are trading with China. We believe this block of activity is going to save the world,” he said of the troubled global economy.
