Invesco launches Belt and Road bond fund for retail investors

With target volatility of 4pc, new fund may potentially apply for approval for mutual recognition after a year, when it’s assets under management are expected to top US$31m

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Land reclaimed from the Indian Ocean for the Colombo Port City project in Colombo, Sri Lanka. The Port City project was initiated as part of China’s Belt and Road Initiative. Photo: AP

Published: 7:31am, 2 Mar 2018Updated: 10:51am, 2 Mar 2018

Invesco, the international asset manager, has launched a Belt and Road bond fund – the first such fund approved by the Securities and Futures Commission for retail investors – aimed at capturing investment opportunities arising from China’s economic initiative linking 65 countries across Asia and beyond.

The open-ended fund will invest in dollar-denominated bonds across different sectors and be issued by countries situated along the ancient Silk Road trading routes involved in the new initiative, which is expected to generate a bond market worth US$1 trillion in coming years, said Terry Pan San-kong, chief executive officer, Greater China, Southeast Asia and Korea at Invesco.

The Atlanta, US-headquartered Invesco has fixed income assets under management of US$312.1 billion.

The new fund has a target volatility of 4 per cent, and may potentially apply for approval for mutual recognition after a year, when it’s assets under management are expected to top 200 million yuan (US$31 million), Pan added.

Invesco estimates China will invest US$150-200 billion annually for the next 5-10 years in building ports, infrastructure, coal mines, railways, roads, and oil pipelines. Photo: Reuters

“While the Belt and Road is led by China, other governments will also have their own investments,” Pan said. “These economies will benefit from [planned] infrastructure development so there will be different investment opportunities available.”

President Xi Jinping first unveiled the Belt and Road concept in 2013. It potentially will involve projects in 65 countries on three continents, stretching from Kazakhstan and Uzbekistan, to Sri Lanka, to Russia, Thailand, Malaysia and Indonesia.