ING Asian Debt Strategy

Transkript

1 ING Asian Debt Strategy Roy Scheepe ING Investment Management Asia Pacific (Singapore) Limited Wiesbaden, June ING Asian Debt Strategy

2 Why Asian Debt? Solid fundamentals Long-term appreciation potential of Asian currencies Attractive valuations of Asian bonds vis-à-vis global counterparts Diversification benefits Steady growth of asset class Dedicated investor base Favorable risk-reward profile 1 ING Asian Debt Strategy

3 The Asian century 70 Asia s share of global GDP Global population % of global GDP Bln China India Other Asia US Japan Germany UK Source: Asian Development Bank (Asia 2050: Realizing the Asian Century, August 2011), Maddison ( ) (2007), Centennial Group International ( ) (2011). Data for are PPP and data for are in market prices. Asia accounts for 60% of the world s population Asian Development Bank: Asia to account for over 50% of global GDP by Goldman Sachs estimates that, by 2050, the Chinese GDP will exceed US GDP by 50% and that Indian GDP will exceed Euro Area GDP. 2 ING Asian Debt Strategy

4 Asia vs other EM: better fiscal dynamics, lower inflation 8% Inflation 60% Public debt as % GDP 6% 50% 5% 3% 2% 0% Asia EMEA LatAm E 2012F 2013F 40% 30% 20% 10% 0% Asia EMEA LatAm E 2012F 2013F Source: Credit Suisse (EM Quarterly, January 2012) Aggregates for regions are weighted by 2010 nominal GDP ($bn) figures. Asia doesn't include Japan Current account surplus/deficit E % of GDP Singapore Malaysia Taiwan Netherlands Hong Kong Russia Germany Thailand China Korea Philippines Japan Hungary Ireland Indonesia Euro Area Mexico Brazil Australia Egypt United States Source: CEIC, Haver, CIRA, Citigroup, March 2012 * India current account based on March data (fiscal year end) Italy South Africa India* Vietnam Spain New Zealand Sri Lanka Portugal Greece 3 ING Asian Debt Strategy

5 Sovereigns debt levels and trend Asia-Pacific sov. debt/gdp US & Europe sov. debt/gdp % of GDP Source: Moody s Investor Service, Asia-Pacific Sovereigns in 2012 and Beyond, February 2012 % of GDP Asian (ex-japan) sovereign debt ratios are in good shape relative to their developed-market peers ING For Asian professional Debt investors use only and not for use in public 4 ING Asian Debt Strategy

6 Primary Asian Debt strategies Asian Debt Hard Currency Asian Debt Local Currency Credit risk dominant Asia risk remuneration in form of credit spread Increasingly a corporate asset class FX and interest rate risk dominant Direct link to domestic macro cycle Mainly government debt: corporate debt markets still developing Hard-currency sovereigns and corporates Local-currency LC Money government Market bonds Dedicated track record since 1996 Dedicated track record since 2008 Co-manage global LC EMD strategy since ING Asian Debt Strategy

7 Growth of Asian bond market USD, trn Asia ex-japan has grown to become world s 4 th largest bond market Foreign CCY Local CCY (Sep) Sources: ING Investment Management; BIS, ADB, HSBC; and, Bloomberg L.P. Local-currency Daily Turnover translated to USD based on 31 March 2012 FX rates from Bloomberg. Country Bid/Ask Daily Turnover (US$bn) China Hong Kong * India Indonesia Korea Malaysia Philippines Singapore Taiwan Thailand Australia New Zealand Russia Brazil Mexico * Excludes bills 6 ING Asian Debt Strategy

8 Asia: Ratings trend Foreign currency ratings Investment grade Aaa Aa1 Aa Aa3 A A2 A Baa1 Baa Baa3 Ba Ba2 Ba B1 B B Apr-12 High yield Baa3 5.5 Ba1 5 Ba2 4.5 Ba B1 B B3 Caa Apr-12 Singapore HK China Taiwan Malaysia Korea Thailand India Indonesia Philippines Sri Lanka Vietnam Pakistan While developedmarket sovereign issuers face significant challenges as reflected by downgrades, the rating trend for Asian sovereign issuers continues to develop positively. Source: Moody s Foreign Currency Ratings as of 30 April ING Asian Debt Strategy

9 Asia: Ratings trend Local currency ratings Investment grade Aaa 9.5 Aa1 Aa Aa3 A A2 A Baa1 Baa Baa3 Ba Ba2 Ba B1 B B Apr-12 High yield Baa3 5.5 Ba1 5 Ba2 4.5 Ba B1 B B3 Caa Apr-12 Singapore HK China Taiwan Malaysia Korea Thailand India Indonesia Philippines Sri Lanka Vietnam Pakistan Source: Data based on Moody s, data as of 30 April Note: No local-currency debt rating from Moody s for Sri Lanka, S&P rating used in lieu thereof. 8 ING Asian Debt Strategy

10 Asian Debt: complementary to global EMD JPM EMBI Global Diversified: Small Asian weight Latin 39.1% Middle East 4.7% Africa 6.0% Malaysia 13.1% China 12.9% Sri Lanka 4.8% Vietnam 3.6% Pakistan 1.9% Asia 18.7% Indonesia 31.1% Philippines 32.7% Europe 31.6% Source: JPMorgan, as of 30 April Most of Asia solid investment grade: Hong Kong, Singapore, South Korea and Taiwan not emerging, Malaysia soon to follow. No corporate debt in JPM Emerging Market Bond Index. 9 ING Asian Debt Strategy

11 Asian HC Bonds: JPMorgan Asia Credit Index Duration: 5.49 years Yield: 4.96% Market Cap: $313bn Outstanding issues: 458 Outstanding issuers: 214 Average Rating: Baa3/BBB- # Country Sector Rating China 13% Philippines 13% India 8% Others 2% Korea 22% Hong Kong 16% Industrials 26% Oil & Gas Media & 5% Telecom 3% Utilities 4% Sovereign 22% BB 20% B 5% NR 4% AAA 2% AA 6% A 36% Thailand 2% Malaysia 4% Indonesia 13% Singapore 7% Financials 19% Quasi-Sov 21% BBB 27% Source: JPMorgan as of 31 March # The average rating of the Fund is determined by calculating the portfolio s weighted average security rating factors. Security rating factors are based on the security s Moody s rating or, if not available, the security s S&P rating. 10 ING Asian Debt Strategy

12 Asian LC Bonds: HSBC Asia Local Bond Index HSBC Asia Local Bond Index Duration: 5.36 years Yield: 3.77% Market Cap: US$1,256bn Outstanding issues: 919 Outstanding issuers: 230 Average Rating # : Baa2 / BBB Country Sector Rating Philippines 5% China 11% India 6% Hong Kong 13% Financial 7% Utilities 2% Consumer 1% Industrial 2% BB 5% Not Rated 5% AAA 18% Indonesia 13% Malaysia 10% BBB 27% AA 15% Thailand 8% Singapore 15% Taiw an 3% Korea 16% Government 88% A 30% Source: HSBC Asian Local Bond Index as of 31 January 2012 # The average rating of the Fund is determined by 1) average of the three or, if not available, 2) the lower rating of the available two rating agencies or 3) the ratings of the sole agency that is providing the rating for security. If they do not fall in the above options, they will be classified as not rated. 11 ING Asian Debt Strategy

13 Asian Debt: 5 year historical returns and volatility sov. debt corporate debt equities Asset Category Return Risk Asia USD Bonds 7.46% 9.77% US Treasuries 6.38% 5.26% European Govt Bonds 4.74% 4.35% UK Gilts 7.83% 6.45% Global EM Debt 8.25% 10.85% Asian LC Bonds 6.73% 8.10% Asian IG Corp 6.60% 9.14% Asian HY Corp 8.49% 21.00% US IG Corp 6.94% 7.47% US HY Corp 8.10% 14.28% European IG Corp (Unhedged) 4.44% 4.88% European HY Corp (Unhedged) 8.18% 16.90% World Equities -0.13% 20.71% EM Equities 2.37% 22.33% Asian Equities 5.62% 28.50% European Equities -6.51% 18.22% Return per Risk Source: JPMorgan, HSBC, Barclays Based on annualized USD monthly returns for 5 years as of 31 March 2012, monthly returns are based on local currency returns of the various asset classes. Asian Debt has provided investors with relatively high returns In times of financial market stress, Asian Debt market volatility has been relatively high due to the relatively illiquid nature its corporate segment Relative inefficiency of Asian Debt market (under-researched) provides opportunity for alpha generation 12 ING Asian Debt Strategy

14 Correlation of Asian Debt with other asset classes sov. debt corporate debt equities Asset Category Asian USD Bonds Asian LC Bonds Asian USD IG Corp Asian USD HY Corp US Treasuries European Govt Bonds UK Gilts Global EM Debt Asian LC Bonds US IG Corp US HY Corp European IG Corp (Unhedged) European HY Corp (Unhedged) World Equities EM Equities Asian Equities European Equities Source: Barclays, HSBC, JP Morgan Based on annualized USD monthly returns for 5 years as of 31 March Monthly returns are based on local currency returns of the various asset classes. Inclusion of Asian Debt aids diversification 13 ING Asian Debt Strategy

15 Asian vs Global government bond yields Attractive yield pick up Yield (%) HSBC Asian Local Bond Index Citi World Government Bond Index Source: Bloomberg. As of 31 March ING Asian Debt Strategy

16 Asia debt: attractive risk adjusted returns Asia HC debt vs. Asia equity Asia LC debt vs. Asia equity Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Mar-01 Jan-02 Nov-02 Sep-03 Jul-04 May-05 Mar-06 Jan-07 Nov-07 Sep-08 Jul-09 May-10 Mar-11 Jan-12 JP Morgan Asia Credit Index MSCI Asia ex-japan Index HSBC Asia Local Bond Index MSCI Asia ex-japan Index Note: JP Morgan Asia Credit Index and MSCI Asia ex-japan Index reset at 100 as per 30 Nov, 1999 Source: Bloomberg, HSBC, JP Morgan, data expressed as of 31 March Note: HSBC Asia Local Bond Index and MSCI Asia ex-japan reset at 100 as per 30 Mar, ING Asian Debt Strategy

17 Expertise in Asian Debt among a broad range of strategies Hard Currency (HC) Debt Local Currency (LC) Debt Asia HC EMD HC Global HY Asia LB EMD LC EMD L Bond Asia Exposure 100% Asia Exposure +/-15% Asia Exposure +/- 5% Asia Exposure 100% Asia Exposure +/- 25% Asia Exposure +/- 30% Benchmark Benchmark Benchmark Benchmark Benchmark Benchmark JPM Asia Credit Index (JACI) JPM Emerging Markets Bond Index Global Div (EMBI GD) BarCap Composite U.S. / Europe High Yield Index HSBC Asian Local Bond Index (ALBI) JPM Emerging Local Markets Index Plus (ELMI+) JPM Global Bond Index - Emerging Markets (GBI EM GD) Total assets managed by the Asian Debt Team is USD 4.9 bln as of 31 March ING Asian Debt Strategy

18 ING Investment Management Asian Fixed Income Team Desmond Lim Portfolio Assistant Wee Lee Cheng Sr. Credit Analyst Rob Drijkoningen Co-head, Emerging Market Debt Clement Chong Sr. Credit Analyst Economist (in Progress) Joep Huntjens Sr. Investment Manager (Hard Currency) Prashant Singh, CFA Sr. Investment Manager (Local Currency) Michael Reyes, CFA Investment Manager (HC Sov, Primary Trader ) Sean Jutahkiti, CFA Sr. Credit Analyst Yuan Xing Pek, CFA Credit Analyst Peter Sengelmann, CFA Client Portfolio Manager As of 30 April ING Asian Debt Strategy

19 Integration with EMD teams and Credit teams in other regions Asia (Singapore) Europe (The Hague) Americas (Atlanta) Em. Markets Sovereign, Rates & FX Focus Asia Focus Prashant Singh Michael Reyes Economist (Vacancy) EMEA Focus Head of Global EMD 1 Strategist 3 Portfolio Managers LatAm Focus 3 Portfolio Managers 1 Credit Analyst Corporate Credit Focus High Yield Inv. Grade Asia Focus Europe Focus US Focus Joep Huntjens Wee Lee Cheng Sean Jutahkiti Clement Chong Yuan Xing Pek 4 Portfolio Managers 5 Credit Analysts Europe Focus Head of Global HY 1 Portfolio Manager 3 Credit Analysts 6 Portfolio Managers 6 Credit Analysts US Focus 2 Portfolio Managers 5 Credit Analysts ING IM Asian Debt Team 18 ING Asian Debt Strategy

20 ING (L) Renta Fund Asian Debt (Hard Currency) Characteristics Objectives Investment objective : Outperform the JP Morgan Asia Credit Composite Index over a 3 year period, with a target information ratio of 0.5 Benchmark : JP Morgan Asia Credit Composite Index Target tracking error : 1% to 3% Other characteristics Investment universe : Debt instruments denominated mainly in USD, issued by issuers from Asian countries, such as China, Hong Kong, India, Indonesia, Malaysia, South Korea, Philippines, Singapore, Taiwan and Thailand. Investment style : Multi-alpha, fundamental, bottom-up driven Currency exposure : Up to 1/3 rd of the portfolio can be invested in debt issued in Asian currencies (off-benchmark), Yen or Euro. Currency risk is actively managed. Single holding exposure : Maximum single holding 10% Assets under management : Total assets approx USD 541m (as of 31 March 2012) Mutual fund assets USD m (as of 30 April 2012) Effective yield : 4.93% (as of 30 April 2012) Weighted average duration : 5.01 (as of 30 April 2012) Benefits : Attractive risk - return characteristics for Asian debt market Diversification benefits International investors underinvested, although this may not change soon Capitalise on Asian debt market inefficiencies via multi-alpha strategy For illustration purposes only and the information is not an indicator of future performance. 19 ING Asian Debt Strategy

21 Strong track record in Asian Debt (Hard Currency) Performance (%) As of 30 April 2012 ING (L) Renta Fund Asian Debt (Hard Currency) P Cap Rolling Annualized 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years JP Morgan Asia Credit Composite Index* Value Added Source: ING Investment Management Europe. Gross performance in USD with dividend reinvested. All data are expressed as of 30 April *Benchmark of this strategy changed from JP Morgan EMBI Global Diversified Asia to JPMorgan Asia Credit Index (JACI) - Sovereign & Quasi-sovereign on March 1, On June 1, 2005, benchmark changed from JACI - Sovereign & Quasi sovereign to JPMorgan Asia Credit Composite Index, representing a better diversified index with less concentration to individual issuers such as the Philippines government. The benchmark is using gross series in USD. Performance quoted above is historical and does not guarantee future results. Star ratings & recent awards - ING (L) Renta Fund Asian Debt (Hard Currency) 1Overall Morningstar Rating 13-year Morningstar Rating 2 Best Bond Asia Pacific Fund over 3 & 5 years 3 Best Bond Asia Pacific Fund over 3 & 10 years 4 Best-in-Class Fund for the Asia Bond category 5 Winner of AsianInvestor 2012 Investment Performance Awards - Hard currency Category Morningstar, Inc. All right reserved Morningstar Rating TM as of 30 April Lipper Fund Awards 2012 Hong Kong reflect fund s performance as at 31 December Lipper Fund Awards 2012 Singapore reflect fund s performance as at 31 December Benchmark 100 Funds of the Year 2011 is based on the performance as of 31 December AsianInvestor 2012 Investment Performance Awards is based on the performance as of 31 December ING Asian Debt Strategy

22 ING Asian Debt Local Bond Strategy Typical characteristics Objectives Investment objective : Outperform the HSBC s Asian Local Bond Index over a 3 year period, with a target information ratio of 0.5 Benchmark : HSBC s Asian Local Bond Index (ALBI) ex China, India Target tracking error : 1% to 3% Other characteristics Investment universe : Debt instruments denominated in local currency, issued by issuers from Asian countries, such as China, Hong Kong, India, Indonesia, Malaysia, South Korea, Philippines, Singapore, Taiwan and Thailand Investment style : Multi-alpha, fundamental, bottom-up driven Currency exposure : Benchmark currencies + USD (max 10%); Max. 10% deviation per currency from benchmark weight Single holding exposure : Maximum single holding 10% Assets under management* : Total assets approx. USD 1.2bn (as of 31 March 2012) Mutual fund assets USD 83m (as of 30 April 2012) * Dedicated Asian Debt LC funds. Source ING IM Asia Pacific For illustration purposes only and the information is not an indicator of future performance. 21 ING Asian Debt Strategy

23 Asian Debt Local Bond Mandate Performance (%) As of 31 March 2012 Rolling Annualised 1 Month 3 Months 6 Months 1 Year 3 Years ING Asian Debt Local Bond Strategy HSBC ALBI (customized)* Value Added Source: ING Investment Management Asia Pacific, Performance Measurement. Gross performance in USD with dividend reinvested. All data are expressed as of 31 March Inception date: 14 May *The benchmark is customized based on the HSBC Asian Local Bond Index, and is displayed using gross series in USD. Note: ING IM has extensive experience in managing Asian debt local currency as an integrated part of our Global Emerging Market Local Currency (EMD LC) strategies, and has been running institutional mandates dedicated to Asian local currency debt since mid The performance shown is for reference only and is the not the track record of a fund. Different fee structures and charges will apply to the ING (L) Renta Fund Asian Debt (Local Bond) fund (the Fund ). The performance shown does not indicate how the Fund will perform. The Fund has a broader investment universe and a broader corresponding customized benchmark. Performance quoted above is historical and does not guarantee future results. 22 ING Asian Debt Strategy

24 Summary ING Asian Debt Strategy Clear and proven investment philosophy Large and experienced specialist team based in Asia (Singapore) Strong track record (both absolute and relative) Favourable balance of moderate risk and attractive returns Availability via Luxembourg based Funds (UCITS) with daily trading and various share classes (hedged/ unhedged) 23 ING Asian Debt Strategy

25 Ansprechpartner - Niederlassung Deutschland - Westhafenplatz Frankfurt Web: Susanne Hellmann Managing Director Tel.: / Fax: / susanne.hellmann@ingim.com Michael Schrinner Senior Sales Director Institutionals Tel.: / Fax: / michael.schrinner@ingim.com 24 ING Asian Debt Strategy

26 Rechtliche Hinweise Die in dieser Publikation enthaltenen Informationen dienen ausschließlich informativen Zwecken und stellen auf keinen Fall ein Angebot, insbesondere einen Prospekt oder eine Aufforderung zum Handel, Kauf oder Verkauf von Wertpapieren, bzw. zur Teilnahme an einer Handelsstrategie, dar. Diese Publikation ist ausschließlich für professionelle Anleger bestimmt. Obwohl der Inhalt dieser Publikation mit großer Sorgfalt zusammengestellt wurde, können wir keine - weder ausdrückliche noch stillschweigende - Gewähr für die Richtigkeit oder Vollständigkeit der Angaben übernehmen. Wir behalten uns das Recht vor, jederzeit und unangekündigt Änderungen oder Aktualisierungen der in dieser Publikation enthaltenen Informationen vorzunehmen. Weder ING Investment Management (die für diesen Zweck ING Asset Management (Europe) B.V. als Rechtsperson angibt) noch irgendeine andere zur ING-Gruppe gehörende Gesellschaft oder Körperschaft noch irgendwelche Vorstandsmitglieder, Geschäftsführer oder Mitarbeiter können direkt oder indirekt für irgendwelche in dieser Publikation enthaltenen Informationen und/oder Empfehlungen haftbar oder verantwortlich gemacht werden. Die in dieser Publikation enthaltenen Informationen sind auf keinen Fall als Erbringung einer Investmentdienstleistung zu verstehen. Die Verwendung der in dieser Publikation enthaltenen Informationen erfolgt ausschließlich auf eigene Gefahr. Wir sind weder direkt noch indirekt für irgendwelche Verluste oder Schäden, die dem Leser durch die Verwendung dieser Publikation oder durch eine darauf basierende Entscheidung entstehen, haftbar. Investitionen sind mit Risiken verbunden. Bitte beachten Sie, dass der Wert der Anlage steigen oder sinken kann und die Wertentwicklung in der Vergangenheit nicht notwendigerweise aussagekräftig für die Wertentwicklung in der Zukunft ist und in keinem Fall als aussagekräftig betrachtet wird. Diese Publikation und die darin enthaltenen Informationen sind streng vertraulich und dürfen zu keinem Zeitpunkt ohne unsere vorherige Zustimmung kopiert, vervielfältigt, verbreitet oder Dritten zugänglich gemacht werden. Jegliche Ansprüche, die sich aus oder im Zusammenhang mit den Bedingungen dieses Haftungsausschlusses ergeben, unterliegen niederländischem Recht. Für alle in dieser Publikation genannten Produkte oder Wertpapiere gelten andere Risiken und Geschäftsbedingungen, die von jedem Anleger vor einem Anlagegeschäft einzeln durchzulesen sind. Die in dieser Publikation enthaltenen Informationen stellen auf keinen Fall eine Werbung für den Kauf oder Verkauf von Kapitalanlagen bzw. für die Zeichnung von Wertpapieren dar. Bezüglich der in dieser Publikation genannten Produkte oder Wertpapiere sind möglicherweise weitere Informationen über bestimmte für diese Produkte oder Wertpapiere geltende Beschränkungen aufgrund der jeweiligen gesetzlichen Bestimmungen erforderlich. Diese Publikation ist nicht als Werbung für den Kauf oder Verkauf von Kapitalanlagen bzw. für die Zeichnung von Wertpapieren gedacht und auch nicht für Personen in Ländern bestimmt, in denen die Verbreitung solcher Materialien aufgrund geltender Vorschriften oder Gesetze verboten ist. Allein verbindliche Grundlage für den Erwerb von ING Investmentfonds sind die jeweiligen Verkaufsprospekte mit Risikohinweisen und ausführlichen Informationen, die Sie kostenlos bei ING Asset Management B.V., Niederlassung Deutschland, Westhafenplatz 1, Frankfurt am Main, oder unter [ erhalten. 25 ING Asian Debt Strategy