Money Moves

Breaking away from benchmarks

By Julia Willshire

This is a fortnightly series of articles focusing on the banking and financial industries

Given the current low interest rate environment and the volatility of stock markets, many investors have turned their attention in the last couple of years to fixed-income products. That approach, though, may be about to change. As Ginie Lam, head of marketing and communications, INVESCO Asia Ltd explains, "There are other types of product that can generate relatively high regular income. These include portfolios consisting of both high-yield corporate bonds and emerging market bonds."

Most economies are now expanding again and the general outlook for 2005 is relatively upbeat. Ms Lam says, "We are particularly optimistic about Asia. While exports stay firm, domestic consumption is also climbing, a trend that is especially apparent in Malaysia and Thailand. Stronger domestic consumption is also expected in Hong Kong."

A return of confidence in the Japanese market is also forecast. "The inflow of foreign funds was a major factor in the strong performance of the Tokyo stock market in the first half of the year," Ms Lam notes.

For this reason, the company has recently introduced in Hong Kong a range of open-ended funds called the INVESCO Series. "These funds have previously been sold by overseas offices within the group," Ms Lam explains. "They have a long track record and are not benchmark-oriented funds so there is no particular market index which they must follow." As such, the fund manager does not need to stick to a set guideline in terms of industry or country allocation and has a greater degree of latitude. Investment choices can be based purely on the assessment of each stock.

The non-benchmark concept is new to Hong Kong and Ms Lam believes it is one that investors should explore. "This approach allows flexibility for the fund manager to seek positive returns in both bull and bear markets," she says. "We expect the assets to show good growth over time."

Taken from Career Times 29 October 2004, p. 2
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