Baring Asset Management has launched a China bond fund with the aim of maximising total return over the long term, through income, capital appreciation and currency gains. The fund will invest in debt securities related to China and debt denominated in renminbi (RMB).
Barings head of Asian debt, Sean Chang, said he believed that China’s apparent commitment to open up its capital markets and make the renminbi a global currency offers potential for investors. Chang said: “The increase in bond issuance in China has been matched by a marked increase in demand as investors seek access to the expected long-term appreciation of the RMB. While the RMB has recently been allowed to strengthen against the US dollar, our view remains that the currency remains structurally undervalued, with significant potential for appreciation relative to not only the US dollar, but all other major currencies.”