This article first appeared in The Edge Financial Daily on March 6, 2020

KUALA LUMPUR: RHB Asset Management Sdn Bhd (RHBAM) is partnering AllianceBernstein Holding LP to launch the RHB American Income Fund, which aims to achieve an attractive return on investment over the long term.

The fund will invest in one target fund, the American Income Portfolio (AIP), an award-winning fund ranked first for three-, five- and 10-year periods in the Bond USD category.

The RHB American Income Fund invests at least 95% of its net asset value in the AIP target fund, with risk management strategies and techniques employed at the target fund level, said RHBAM in a statement yesterday.

It said the AIP has consistently delivered top quartile returns for investors, successfully navigating through challenges, including the 2008 global financial crisis, with assets under management of US$27.6 billion (RM114.8 billion) as at Dec 31, 2019.

The portfolio seeks to provide consistent current income by optimising best opportunities using a US dollar-denominated multi-sector bond approach, adopting a disciplined credit barbell approach by balancing two major risks in fixed income and limiting exposure to below investment-grade rated bonds to 50% and avoiding CC-rated issuers.

“Recognising the volatile global economic landscape, the RHB American Income Fund offers investors four key benefits, namely portfolio diversification, harnessing of opportunities and exposure to multiple sectors, the possibility of quarterly income distribution depending on prevailing market conditions and a positive track record.

“We target to achieve a subscription of more than RM100 million within the next couple of months. Under the current market environment, we believe that a US fixed income portfolio provides investors with the necessary income stability as well as potential for capital appreciation in light of the slowdown in global growth, which is also expected to remain slow for the near to medium term,” said RHBAM managing director and chief executive officer, regional head Eliza Wong.

She said the central banks have been cutting interest rates to record lows and therefore the yields will remain at prevailing levels and possibly lower, amid the global risk-off sentiment, especially with the Covid-19 outbreak.

“These macro developments have created an opportunity for US fixed income, especially in a portfolio that allows for a multi-sector approach to diversify sources of income and to enhance yield,” added Wong.