The headline risk here, folks, is that if you wait for your central banker to give you insight into ...
Aberdeen: Diversified Income from Asia-Pacific
05/26/2015 10:00 am EST
The size of the Asian local currency market has grown from $1.5 trillion a decade ago to more than $8 trillion now; nonetheless, few funds let individuals invest in bonds issued in the Asia-Pacific region, suggests David Dittman, editor of newly-launched Pacific Wealth newsletter.
Enter Conservative holding Aberdeen Asia-Pacific Income Fund (FAX), the only vehicle of its kind that lets US-based investors tap into developing Asia’s debt markets, as well as Australia’s.
This closed-end fund is tightly tied to the Australian dollar and Asia-Pacific growth and it’s been a tough road on both of those counts. But at its current level, the fund offers both good value and an impressive 7.7% yield.
The fund gives you exposure to bonds from Australian, Chinese, South Korean, and Singaporean governments and corporations, as well as fixed-income securities from countries such as Indonesia, India, Thailand, the Philippines, and Malaysia.
Aberdeen Asia-Pacific Income’s foreign currency exposure makes it a compelling option for income investors looking for some protection from an eventual downturn in the US dollar.
Meanwhile, longer-term factors point to plenty of upside from here. For one, Asia’s fundamentals remain robust, with rising incomes and a growing middle class.
In addition, continued economic reforms reinforce the appeal of Asian fixed income for diversification within a global portfolio.
China is the region’s wildcard, as it is shifting away from an export-led growth model to one built around domestic demand. As a result, China’s growth is slowing and will continue to moderate as this transition continues.
But the upside is that it’s helping create bargains for investors and it will pay off with longer-term stability.
The appeal of Asian fixed income—such as robust fundamentals, economic reforms, and geographic diversification—is backed up by diversity within the region itself.
That’s a key takeaway: By focusing on just one, two, or a handful of Asian countries, you’re robbing yourself of the benefits of that diversity.
Luckily for investors, this is where the Aberdeen Asia-Pacific Income Fund shines. Aberdeen Asia-Pacific Income Fund is a relatively safe way to establish broad regional diversification.
More from MoneyShow.com:
Related Articles on GLOBAL
The S&P 500 Index peaked on August 29 and has been treading water since then. (See chart below.)...
Global dividends reached record levels in the second quarter of 2018, reflecting strong earnings and...
In the current environment, almost any stock purchase is speculative; our latest recommendation &mda...