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SQM Research Ratings Update -  Monday
April 13 2015
Property Valuations
Research Reports
Discounted/Distressed Properties
Funds Research
Ratings Table

To see the entire table of SQM Research's fund ratings, click HERE

(Please note: In order to view individual ratings reports you must be subscribed to SQM Research Ratings research. To subscribe, click HERE)

 

SQM Research Releases it's First Fixed Income Report 

 

 
 - With Rob da Silva, Head of Research

This week commemorates the release of SQM Research’s first fixed income rating for Premium Asian Income Fund. The report was greatly anticipated by SQM Research and marks the beginning of our expansion into fixed income and alternatives fund manager ratings.

The Premium Asia Income Fund (the Fund) is an open-ended unlisted unit trust that invests in a concentrated portfolio of high-yielding fixed income securities issued by companies in Asia and the Middle East. It employs a value-orientated approach to security selection. Its focus is predominantly Asia, with an emphasis on China and Hong Kong.

The Fund seeks to deliver high returns dominated by interest and coupon income by finding high yielding securities that are mispriced relative to their fundamental value. These securities are held for their yield and for the potential of price appreciation over time either through pull-to-par as maturity approaches, or movement towards fair market value as the market recognises the undervaluation.

This approach aims to deliver two percent outperformance of the RBA Cash Rate over three to five year time horizons.
 
The Fund has received a 3.75-star rating.

This is a “Favourable” rating and reflects SQM Research’s opinion that the Fund can be considered for APL inclusion.

The rating for the Fund reflects a number of key features:

On-the ground dedicated analyst resources specialising in the Asian markets (both debt and equity), qualified and experienced investment team, value-orientated security selection approach with an emphasis on managing the idiosyncratic risks of a concentrated portfolio.

It is noted that the Fund is, by its nature, a high yielding concentrated portfolio that will be exposed to the volatility associated with changes in market sentiment about China, the real estate sector, and the below investment grade bond market in general. It is not immune to the credit cycle, although attention and resources are applied to managing that risk.

The Fund’s style and strategy has not yet been tested through a full credit cycle, although over its 3.5-year life span it has endured a number of short term market volatility shocks (e.g. mid-2013s “taper-tantrum”). The conditions under which the Fund could experience a period of material under performance of its benchmark include a protracted or sharp downturn in the below investment grade bond market, the Chinese economy significantly under performing expectations and difficulties in the Asian real estate sector (particularly that of China).

The full report is now available online.

Whats next for Fixed Income and Alternatives? 

There will be further reports into fixed income and alternatives in the near future. These reports will be more broad based and unconstrained by benchmark comparisons, which will be interesting choices for investors in the fixed income components of their portfolios. Sign up to SQM Ratings Research here.


About SQM Research

SQM Research is an independent research house which specialises in providing accurate related research and data to financial institutions, property professional, real estate investors and the media. It is owned and operated by one of the country’s leading property analysts, Louis Christopher.


 

Copyright © 2015 SQM Research, All rights reserved.

Our mailing address is: GPO Box 3611, Sydney, NSW 2001, Australia



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