M&G has announced the launch of the M&G (Lux) China Corporate Bond Fund, expanding its range of global fixed income offerings to external clients.

The fund aims to give investors access to China’s onshore corporate bond market and meet demand for diversification opportunities in fixed income.

Amid the ongoing shift in global interest rate cycles, the fund seeks to generate a higher total return than the China corporate bond market over any three-year period.

M&G said that, while China’s monetary policy diverging from major developed economies, the fund looks to capture relative value opportunities, combining capital growth and income, while expanding global investor access to China’s dynamic credit market.

The fund will actively allocate to high-quality corporate credits, including state-owned entities and local government financial vehicles, while maintaining flexibility to invest in USD-denominated bonds issued by China entities.

Singapore-based William Xin, who has more than 20 years of experience in China’s credit market, will manage the fund.

He will be supported by M&G’s Asian fixed income team, as well as utilise the firm’s research capabilities and proprietary credit analysis across the UK, Europe, and the US.

The fund will be classified as SFDR Article. It is structured as a sub-fund of a UCITS Luxembourg SICAV, and will be available to institutional and wholesale investors in Europe, and professional investors across Asia.

“Investor demand for diversified fixed income exposure continues to grow, particularly in Asia and Europe,” commented M&G Investments chief investment officer of fixed income, Andrew Chorlton.

“This launch follows our significant investment in expanding M&G’s global credit platform, including build-out of our Asian fixed income expertise, to enhance our ability to provide clients with innovative solutions and access to leading fixed income markets.

“By leveraging our in-house credit research capability and deep experience in credit selection across investment teams, this strategy offers investors a compelling way to access China’s evolving onshore bond market, while benefitting from M&G’s disciplined approach to active fixed income management.”

M&G Investments portfolio manager, Asia fixed income, William Xin, added: “China’s corporate bond market is one of the most dynamic in the world and global investors are attracted to the diversification it offers, its relatively stable risk-return profile and its low correlation to other bond markets.

“As the market continues to internationalise, we expect this will further increase demand for Chinese Yuan-denominated assets over the long-term.”

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