Winnersrationale

While large portions of China’s credit market have been shaken by volatility in recent months, BlackRock’s flagship China Bond fund managed to navigate the minefield in this asset class to deliver top-drawer performance to yield-starved investors.

Much of that can be attributed to the fund’s “go-anywhere” strategy, which allows the portfolio managers to invest tactically across both the onshore and offshore Chinese bond markets to take advantage of attractive valuations and price dislocations as and when they emerge. The highly active approach — which combines top-down macro views and bottom-up security selection — results in a fund that can allocate across sovereign, corporate, investment grade and high-yield credit without bias.

As of November 2021, the benchmark-agnostic fund returned -0.78%, 5.17% and 5.18% on a one, three and five-year annualised basis. The fund is rated five stars by Morningstar and has been ranked in the first quartile among its peers in the RMB funds category since its inception.

That performance has contributed to significant inflows for the fund over the last 12 months, with assets under management growing from RMB 17 billion to RMB 53 billion as of November. A large portion of those flows came via private banks in Asia, helped by the addition of new distribution platforms during the period under consideration.

The fund has benefited from a relentless search for yield by private bank clients in a world of ultra-low interest rates across the world’s largest economies. According to BlackRock, the bulk of global fixed income assets that yield more than 2.5% is in China. The fund has equally benefited from a low correlation between China’s onshore and offshore fixed income markets, presenting arbitrage opportunities for the fund’s managers.

For the strong performance of its China bond strategies, BlackRock wins Asian Private Banker’s Best Fund Provider – China Bond.