One product that Asian investors have been pouring into is fixed-maturity funds, which typically offer regular payouts but don’t guarantee returns even if some cite targets. Their asset managers may at times need to load up on riskier notes to try to meet the goals on returns and the maturity terms of the funds. Regulators in Taiwan tightened rules on the products last year after investors flooded into them.
The dangers of individual investors getting into risky debt can be seen in the grim outlook for people who bought securities of Singapore’s Hyflux Ltd. Around 34,000 retail investors in the once high-flying water treatment company now face the possibility of near-total losses.
Many investors appear to want a little extra yield even when markets turn volatile and they park their money in safer assets. BNP Paribas Asset Management, for instance, is offering portfolios whose allocations may be something like 95% bonds and 5% options strategies rather than 100% bonds, to improve the overall yield.
This article was provided by Bloomberg News.