Allianz re-opens offshore renminbi fund after liquidity measures

Allianz Global Investors has re-opened its Luxembourg-domiciled Renminbi Fixed Income fund , having soft-closed it at the end of last year to preserve liquidity.

The move to soft-close the Ucits fund came after assets rocketed to €450 million only two months after it launched.

Although the fund aims to invest in high quality issuers as the market matures, it will initially hold the majority of assets in renminbi deposits through inception, with initial yields of 1%-1.5%, to maintain Ucits compliance.

The fund, managed by Helen Lam, aims to deliver a total return, including currency appreciation, of around 5% over the long-term.

Lam will invest primarily in high grade CNH bonds – CNH denoting the currency being traded offshore, mainly in Hong Kong.

Lam said: ‘We expect that high grade quality CNH bonds should be able to offer a stable return of 3 – 4% through the attractive yield component.

‘We also expect to enhance the portfolio’s total return through duration positioning to capture the policy-driven interest rate movements in mainland China.’

She added: ‘Though the recent fundamental and cyclical factors in China seem to suggest a softening RMB appreciation outlook, we believe that the pace of RMB appreciation will remain stable going forward.

‘This should be supported by China’s strong commitment to the RMB Internationalisation process through the promotion of cross-border trade and investment flows. Recent data suggests that approximate one-tenth of China’s total trade is settled in RMB, up from only 2% two years ago.’