The fund house said it will use the license for its Luxembourg-domiciled Schroder International Selection Fund Asian Bond Absolute Return.
“Demand from our clients for RMB-denominated bonds has remained strong over the years and will continue to grow. This supports our view that Chinese yields are attractive with low inflation and a stable currency,” said Rajeev De Mello, head of Asian fixed income.
Schroders Singapore will be applying to the State Administration of Foreign Exchange for a RMB1bn ($161m) quota for the fund.
Launched in 1998, the Asian Bond Absolute Return fund with $737.5m in assets under management seeks to provide an absolute return of capital growth and income primarily through investment in a portfolio of bonds, fixed and floating rate securities issued by governments, government agencies, supra-national and corporate issuers in Asia (excluding Japan).
As per the latest available portfolio, government bonds account for 54.5% of the assets while corporate bonds have a 23.6% of the corpus. Korean treasuries and Singapore and Indian government bonds feature among its top holdings.
Schorders said its fixed income team already manages around RMB2.4bn worth of offshore RMB investments.
Last week, JP Morgan Asset Management also received an RQFII license for its Singapore business.
A look at the performance of Schroders Asian Bond Absolute Return Fund since inception in 1998, against its benchmark:
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