With the numerous online concern by many folks over the weakening USD and US inflationary pressure from Donald Trump's import tariff, the popular PIMCO GIS Income fund and other US bond funds which are heavily concentrated in US assets has been making people very uncomfortable. The funny thing is that the market cannot decide on whether it will be an inflationary environment or a declining interest rate environment (from imminent rate cut due to worsening business sentiment). There are currently 2 Asian bond funds which I have considered for diversification away from US geographical sector over-concentration.
The 12mth yield for this fixed income fund is at 5.63%. Howver, annualised 1 year return has only been at +2.70%. Strangely, despite it being an Asia Pacific focused bond fund, it contained 2.16% of US bonds in its portfolio- but I guess this is a lot better as compared to the Fidelity Asian Bond Fund which I will discuss further below in Pt 2.
As aforesaid mentioned, a surprising high amount of 27.32% of its investment in bonds is in the United States albeit being an Asian focused fixed income fund. It is giving out 5.65% of distribution yield. Its annualised 1 year return of +2.56% is almost similar to the PineBridge Asia Pacific Investment Grade Bond Fund.
I am currently vested in the PineBridge Asia Pacific Investment Bond Fund as it has the least concentration of US assets in its geographic allocation relative to Fidelity Asian Bond Fund. My personal experience of a higher return fixed income fund is still PIMCO GIS Income Fund which delivered an annualised return of 4.61%. With the economic downturn, it is inevtible that the distribution yield of all bond funds will continue to go further down and prices of bond funds will have potential upside. Anyway, good to put away some of my investments in bond funds which do help a lot in reducing wild volatiltiy in valuation as compared to my equities holding.
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