Asian investors are doing a disservice to their investment portfolios by not diversifying into bonds, a local fund manager says. Rosa Wang, a senior portfolio manager, fixed income, for Dresdner RCM Global Investors Asia, said many Asian investors' allocation into bonds during the past decade had been zero. 'Right now, the environment is good for bonds. We feel we are in a deflationary environment, not an inflationary one and this is something which most people have not been use to. It is quite good for bonds,' she said. Ms Wang, who will be speaking on fixed income at the conference, said the economy was in a period where prices in retail, exports and commodities were decreasing, making it beneficial to bonds. She said bonds provided a fixed payment, usually annually or semi-annually. The downside was the fact inflation ate into the value of the payment but 'we're currently having the reverse of that'. 'We are having a period where, globally, prices are decreasing and, in that environment, bonds are very attractive,' Ms Wang said. Dresdner RCM, the international asset management arm of Dresdner Bank, is bullish on government bonds from the United States, Britain, Italy, Spain, Australia and New Zealand. The company's Dresdner RCM International Income Bond Fund invests only in global government bonds and has its largest position in the US Treasury market. It also holds a significant position in European bond markets. It costs US$5,000 to get into the fund or through a regular investment programme of HK$2,000 per month. In the three years, ending August 31, the fund has increased 19.51 per cent. Ms Wang said bonds should be viewed as a medium-term investment, especially in the next two years. Historically, they had been less volatile than stocks, partly because of the fixed payment associated with them. 'A lot of our funds are overweighted in bonds and that's just a reflection of the environment. As the Asian crisis spreads to places like Russia and Latin America, we see a slowdown in global growth. 'Equities and stocks perform well when growth is fast. Now we are in the contrary position that growth is slowing. In this environment, we favour bonds,' she said. 'In a slowing environment, the central banks will typically have to lower interest rates to try to stabilise things or to try to encourage future growth. 'This makes the value of your bond which you purchased with a certain fixed payment more valuable,' she said.