Source: PIMCO as of 31 December 2019. Sample for illustrative purposes only . *Fallen angels: Bonds that were once investment grade but have since been reduced to junk bonds.
PIMCO’s overall default rate is only 0.3 percent. Normally, high-yield fixed income’s default rate is about 4-5%, compared to PIMCO’s at 0.6% only. Recovery rate is as high as 60% and there’s a chance to enjoy return rather than suffer losses.
Mr. Livas said that in the latter half of this year, investment could improve and the fund is always keeping a close watch on economic trends including declines in virus pandemic, eases of lockdowns in the Europe and the US and monetary measures of central banks in the Europe and the US. These factors will affect the overall economy and targeted assets.
Mr. Kiattisak said that investing during the economic recession provides a good opportunity to reap very high returns in the next years. In the 2008 economic crisis, markets tumbled sharply but provided a 25% return in the following year. And state measures could assist the economy to improve in the next one to two years. Mr. Livas added that, presently, carry yieldof the fund is about 6.3%. It is thus believed that this yield rate can be a good proxy implying the potential attractive return for investors.
Now, investors can consider Krungsri Asset Management’s KFDIVERSE as their potential alternative for foreign fixed income fund. Previously, the Company had launched three foreign fixed income funds, namely KF-CSINCOM and KF-SINCOME investing in securitized debt instruments, and KFPREFER investing in preferred securities which is exposed to higher risk but give higher potential returns. Mr. Kiattisak said that investors should diversify their investment with good proportion. He recommends to have KF-CSINCOM and KF-SINCOME as a core portfolio, while allocate some tactical allocation in KFDIVERSE and KFPREFER in order to gain more return potential.
KFDIVERSE hedges against foreign exchange risks in full amount and offers two investment policies for investors to choose:
KFDIVERS-A: No auto-switching policy
KFDIVERS-R: 4 times a year by automatically switching to units of KFCASH-A (Automatic switching transaction will cause the decrease in outstanding units.)
The fund will make IPO of its units during 19 - 26 May 2020. During the IPO period, investors investing 30 million Baht or more will pay front end fee or switching-in fee at only 0.75% (from normal rate that is 1%).
Krungsri Asset Management Co., Ltd. (“The Management Company”) believes the information contained in this document is accurate at the time of publication, but does not provide any warranty of its accuracy. Similarly, any opinions or estimates included herein constitute a judgment as of the time of publication. All information, opinions and estimates are subject to change without notice.
Please study fund features, performance, and risk before investing. Past performance is not an indicative of future performance.
KFDIVERSE invests in the master Fund named PIMCO GIS Diversified Income Fund (Institutional – Income (USD)) (The master fund), on average in an accounting year, of not less than 80% of fund’s NAV. The master fund has investment policy to invest at least two-thirds of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities | Risk level 5: moderate to high risk
KFDIVERSE may invest in non-investment grade or unrated debt securities, so investors may be exposed to risk which result in loss of investment return and principal.
KFDIVERSE, KF-CSINCOM, KF-SINCOME, and KFPREFER will enter into a forward contract to fully hedge against the exchange rate risk, in which case, it may incur costs for risk hedging transaction and the increased costs may reduce overall return.
For more details or to request for the Fund Prospectus, please contact:
Krungsri Asset Management Co., Ltd.
Tel. 0 2657 5757 or Bank of Ayudhya PCL. / Selling agents