Last year was a roller coaster. While structural drivers such as artificial intelligence proliferation and corporate governance reforms buoyed Asian markets in 2025, fast-evolving trade negotiations, ongoing geopolitical tensions, and concerns over slowing economic growth introduced volatility and widened performance dispersions among major Asian markets. As we enter 2026, we draw on Morningstar's extensive on-the-ground research and frequent interactions with portfolio managers across Asia to explore the key themes shaping their strategies. 

Equity
Asian equities were propelled by technology companies in 2025, fueled by the ongoing AI boom, a trend that mirrored the rally in the US market. The Morningstar Asia ex-Japan Target Market Exposure Index returned around 32% in US-dollar terms, extending its gains from just over 10% in 2024. 

![Screenshot 2026-01-29 150758.png](/uploads/Screenshot_2026_01_29_150758_fae12d1380.png)

China equities have reignited market interest following technological transformations and policy support. That said, a slowing economy, overcapacity, and geopolitical tensions remain. Against this backdrop, fund managers are focusing on selective bottom-up opportunities with sustainable competitive advantages. Louisa Lo, manager at Schroder ISF Emerging Asia, steered away from overly crowded areas such as AI-related hardware companies and instead preferred more reasonably valued internet companies poised to benefit from AI advancements, such as Alibaba.

Following a couple of years of strong performance, Indian equities suffered a steep correction in early 2025, and India was the weakest-performing major Asian equity market despite ending the year in positive territory. On the bright side, this also brought valuations to a more reasonable level for select Indian companies. For instance, investors at Fidelity believe that India remains one of the most attractive long-term growth stories in the region, supported by robust economic growth and a benign inflation backdrop, which creates room for further interest rate cuts.

Meanwhile, the South Korean government rolled out a corporate value-up program in 2024, which has influenced how portfolio managers position themselves in the market. For example, investors at FSSA note early signs of meaningful change in the Korean corporate governance landscape, though they believe reforms will likely take time. Martin Lau of FSSA Asian Equity Plus added to LG Corporation over the course of 2025, which he believes has been among the most progressive in corporate governance.

In ASEAN markets, Pauline Ng, lead manager of JPM ASEAN, remained constructive on the supply chain diversification opportunities on offer in the region, while other managers favored Singapore as a source of defensiveness for their portfolios.

Fixed Income
In 2025, despite growth and inflation-related uncertainties stemming from the impact of trade tariffs, US Treasuries delivered solid returns, supported by a series of Federal Reserve rate cuts. The year also proved favorable for riskier credit assets, as spreads compressed across the board, with emerging-market debt among the top-performing segments.

There is a broad consensus among managers that Asian credit fundamentals are expected to remain resilient in 2026, with default expectations staying low. However, a common concern is the relatively tight valuations, which leave limited room for meaningful spread compression. 

From a country positioning perspective, India remains a consensus favorite among Asian credit managers. The country’s macroeconomic strength and robust growth driven by domestic demand are frequently highlighted as key positives. Building on last year’s trend, many managers also continue to favor offerings from the broader Asia-Pacific market, notably Japan and Australia, supported by high credit quality and reasonably attractive yields.

The troubles at prominent real estate developer New World Development over the past year have led managers to adopt a more cautious stance toward the Hong Kong property sector. Meanwhile, China remains out of favor for most investors. Within the higher-quality investment-grade segment, managers note that Chinese credits are trading at very tight valuations, reducing their attractiveness. On the other hand, within the high-yield market, challenges within the country's property sector remain persistent, as evident from the recent developments at real estate developer Vanke, keeping managers cautious.

To learn more about what is top of mind for Asian portfolio managers and how they are positioning their portfolios to navigate the year ahead, please access our full report, [Starting 2026 on the Right Foot](https://www.morningstar.com/en-hk/business/insights/research/equity-and-fixed-income-manager-trends).


Starting 2026 on the Right Foot

With gold prices soaring to record highs, investors are rushing to gain exposure, many via funds. But in the rush, some pick a gold fund thinking it gives them exposure to the metal, only to end up with a fund full of gold-mining companies, whose returns are influenced by myriad factors beyond just the gold price. 

As shown in Exhibit 1, gold and gold-mining funds are making a strong comeback after years of muted interest from investors. Amid macroeconomic uncertainty and geopolitical concerns, as well as increased demand from central banks and investors alike, the gold price soared to USD 3,825 as of Sept. 30, 2025, a sharp increase of 45% compared with the year before, and it reached a record high closing price of USD 4,294 on Oct. 20, 2025. These funds attracted close USD 50 billion in 2025 as of Sept. 30, marking the strongest year in the past decade.

![Screenshot 2026-01-29 151158.png](/uploads/Screenshot_2026_01_29_151158_8969dc6c1e.png)

**Understanding the Difference**

At first glance, gold funds and gold-mining funds may appear similar. Both are linked to the gold market and may be marketed under the same umbrella. However, their underlying assets—and the risks they carry—are fundamentally different.

Gold funds typically hold physical gold or track its spot price through futures or other instruments. These funds are designed to mirror the performance of gold itself. Gold’s price has seen a sharp rally in recent years, driven by macroeconomic uncertainty, central bank activity, and geopolitical tensions. That said, it is susceptible to significant drawdowns, too, such as in 2013, when expectations of the Federal Reserve tapering its stimulus program amid an improving economic outlook led to a decline in gold prices.

Gold-mining funds, on the other hand, invest in companies that are engaged in the exploration, mining, or processing of precious metals, primarily gold. These are equity investments, where their performance is influenced not only by the price of gold but also by company and sector-specific factors like earnings, cost structures, management decisions, and macroeconomic or geopolitical factors. They tend to be more volatile than gold prices, exhibiting higher correlation with the broader global equity market. Unlike gold, which is a nonyielding asset, however, mining companies generate cash flows and may pay dividends, potentially enhancing investor returns.

To illustrate the differences, consider two of the largest gold and gold-mining exchange-traded funds: SPDR Gold Shares GLD, which reflects the performance of the price of gold bullion, and VanEck Gold Miners ETF GDX, which holds a basket of gold-mining stocks. 

SPDR Gold Shares has posted similar maximum and minimum quarterly returns as the global equity market of around plus/minus 20% in the past two decades, but the returns were far from synchronized, as shown in Exhibit 2. VanEck Gold Miners ETF, meanwhile, has demonstrated amplified swings, both upward and downward, reflecting not only gold price fluctuations, but also the variations in operational performance, financial leverage, and sentiment surrounding the mining companies it holds.

![Screenshot 2026-01-29 151307.png](/uploads/Screenshot_2026_01_29_151307_fcb1533737.png)

**How to Spot the Difference**

One of the most common pitfalls is assuming that any fund with “gold” in its name provides direct exposure to the metal. In reality, many such funds hold stocks, investing in mining companies rather than the commodity itself. For example, BGF World Gold invests primarily in companies engaged in gold mining and does not hold physical gold.

To learn more about the difference between gold and gold-mining funds and how to tell them apart, please access our full report, [Not All That Glitters is Gold](https://www.morningstar.com/en-hk/business/insights/research/gold-investment-guide)




Not All That Glitters Is Gold - Differentiating between gold and gold-mining funds

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# Create a visual map of your financial future

Are you saving money without a clear purpose? And putting off investing because you don’t know where to start?

•	**Give meaning** to your investments by connecting them to your life goals.

•	**Break down your journey** into clear, manageable steps.

•	**Make decisions** that align with what matters to you.

Ready to take the first step?

**[Define your goals](https://www.amundi.com.sg/retail/new-investing-start-here-step-step-guide)**
 
# Wondering which investments actually match your goals?

With countless investment options available, choosing the **right** ones can feel challenging. Investment decisions deserve careful thought.

We cut through the complexity and help you **match investments** to your goals.

Let's clear the path to your investment decisions.
 
# Understand the risk-return connection

![image1.jpg](/uploads/image1_fc61fa6d81.jpg)
 
# Factor timelines in your decision

Your investment horizon significantly influences which solutions make sense for you:

![long-terms-shorts-term.png](/uploads/long_terms_shorts_term_1449ede84d.png)

### Diversify your investments

![image2.jpg](/uploads/image2_f259f8c12e.jpg)
 
# Evaluate different options

There are many options for how you can best build your portfolio:

![different-funds.png](/uploads/different_funds_fd7e1701a3.png)


# From Knowledge to Action

Investment knowledge is your foundation, but action is what builds your future.

These key principles help you better understand your options and have productive conversations with your financial advisor. Today's choices build tomorrow's success.

 

##### Important and Legal Information
This document is issued by Amundi Singapore Limited (Company Registration No. 198900774E) who is regulated by the Monetary Authority of Singapore. 

This document is for information purposes only, is not a recommendation, financial analysis or an investment advice and does not constitute a solicitation, invitation or offer to purchase or sell any product. The information contained in this document is intended for general circulation without taking into account the specific investment objectives, financial situation or particular needs of any particular person. 

The information contained in this document is as at February 2025 except where otherwise stated. The information contained in this document has been obtained from sources believed to be reliable but has not been independently verified, although Amundi and its affiliated companies (collectively “Amundi”) believe it to be fair and not misleading. Opinions expressed in this document are subject to change without notice. Amundi does not accept liability whatsoever whether direct or indirect that may arise from the use of information contained in this document. Amundi and its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this document.

**Past performance and any forecasts made are not necessarily indicative of the future results**. Any forecast, projection or target is indicative only and is not guaranteed in any way. All investments involve risks and the amount received from such investments may be less than the original invested amount. Amundi does not guarantee that all risks associated to the securities mentioned herein have been identified, nor does it provide advice as to whether you should enter into any transaction.

This document is solely for issue in permitted jurisdictions and to persons who may receive it without breaching applicable legal or regulatory requirements. The information contained in this document shall not, without prior written approval of Amundi Singapore Limited, be copied, reproduced, modified, or distributed, to any third person or entity in any country.
This document is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities or services in the United States or in any of its territories or possessions subject to its jurisdiction to or for the benefit of any U.S. Person (as this term is defined in SEC Regulation S under the U.S. Securities Act of 1933). 

**This document has not been reviewed by the Monetary Authority of Singapore.**

How can Goal-Based Investing help you with retirement?

How To Build Wealth ft. Earn Your Leisure

![Morningstar IOOR.png](/uploads/Morningstar_IOOR_7318060d85.png)

Morningstar’s analysts in Asia qualitatively cover a wide range of managed strategies. In addition, we continuously monitor the broader fund universe through discovery meetings. In this quarterly publication, we share our take on a selection of these strategies. For our [third-quarter 2025 report](https://www.morningstar.com/en-hk/business/insights/research/apac-investment-opportunities), we highlight four equity funds, three bond funds, and one allocation strategy.

China equities offer structural growth opportunities and exposure to market leaders beyond the recent onshore rally, thanks to increased policy stimuli. Schroder International Selection Fund China A All Cap targets quality companies in this market, emphasizing firms in growth industries that generate cash and have strong financials. The fund also has the flexibility to invest in select offshore and dual-listed names. It benefits from an experienced lead manager and analyst team, most of whom are dedicated to China equities research.

Global emerging-markets equities have also regained investor interest amid US policy uncertainty and a weaker US dollar, while Southeast Asia equities benefit from the region’s robust demographics and status as a beneficiary of ongoing supply chain diversification. FSSA Global Emerging Markets Focus and FSSA ASEAN All Cap invest in these respective markets using the same high-conviction, quality-growth process that favors firms with capable management teams and entrenched competitive advantages. Both strategies are also led by skilled portfolio managers from FSSA’s well-regarded 14-member investment team.

Income-focused products continue to entice investors amid a volatile market environment. At the higher end of the risk spectrum, Wellington Asia Quality Income taps into the Asia ex-Japan equity opportunity set through a quality-focused, price-conscious approach that is used to invest in companies that offer high dividend yields and capital appreciation potential, with a portfolio yield of around 4%.

UBS US Growth and Income invests in both US stocks and bonds, with a covered-call overlay to enhance portfolio yield to around 5%-6% per year, although its sizable high-yield allocation may limit downside protection in stressed markets.

Moving down the risk spectrum to fixed-income funds, Barings Global Senior Secured Bond has a portfolio yield of around 7% and offers exposure to the secured bond subset of the global high-yield market. The strategy benefits from a seasoned manager duo backed by extensive global credit resources, with credit picks informed by US and European high-yield investment committees.

For Singapore-based investors, Fullerton SGD Income invests in predominantly Singapore- and US-dollar-denominated bonds and offers approximately 4% yield, supported by up to 30% investments in high-yield bonds. Amova Short Term Bond follows a more credit- and duration-controlled approach, investing in high-grade, short-duration Asia-Pacific bonds. Both portfolios’ underlying exposure is fully hedged to SGD.


Ideas on our Radar - Asia Edition: Q3 2025

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*Fullerton Market Update November 2024*

Despite its growing significance, the SGD credit market remains largely under the radar for many global investors. In this article, we aim to de-mystify the SGD credit space by addressing five common myths.

### Myth #1: SGD credit returns are low and not worth the effort 
### Reality:
Contrary to popular belief, SGD credit returns have historically been competitive, even outperforming some larger credit markets. Over the past decade, the SGD investment-grade market has delivered returns that surpassed those of both the U.S. and Asian investme nt-grade USD credit markets (see Figure 1).

![fulleraton2.png](/uploads/fulleraton2_f9508dd33b.png)

On a risk-adjusted basis, SGD credits present an even more compelling proposition, bolstered by a strong institutional client base that provides market stability. These investors tend to maintain holdings through market cycles, resulting in more stable and less volatile credit spreads—a characteristic that enhances the attractiveness of SGD credit for those seeking resilient returns (see Figure 2).

![fulleraton3.png](/uploads/fulleraton3_1c477cda4b.png)

### Myth #2: SGD credits are only issued by Singapore entities, leading to concentrated risk
### Reality:
While a significant portion of SGD issuances come from Singapore entities, around 35% of the SGD credit market is comprised of issuers from beyond Singapore¹ . These include prominent Developed Market financial institutions and key players in sectors such as Asian consumer markets. This diversity broadens investors' exposure, thereby reducing concentration risk and enhancing portfolio diversification.

### Myth #3: SGD credits are only suitable for Singaporean investors
### Reality:
SGD credits offer valuable diversification benefits to a wide range of investors. The credit spreads in SGD markets are generally more stable compared to USD credit markets, primarily due to the anchor role of institutional investors who adopt a buy-and-hold approach. These investors are typically less reactive to short-term volatility, which reduces price swings, and this enhances market resilience. For foreign investors, there is also a potential yield advantage through hedging, with attractive yield pickup available when converting SGD to USD or AUD, enhancing the potential returns for non-SGD-based investors.

### Myth #4: Assessing SGD credit risks is straightforward
The SGD credit market can be quite complex and challenging to navigate due to the prevalence of unrated issuers. It is estimated that more than 50% of SGD credits are not rated by agencies like S&P, Moody’s, or Fitch². Without these external ratings, investors must conduct their own credit assessments to gauge risk and determine whether the yields on offer adequately compensate for that risk. This additional complexity means investors need a strong credit research capability to accurately differentiate between investment-grade and high-yield opportunities.

### Myth #5: SGD credit bonds are easy to acquire in the primary market
### Reality:
While demand for SGD credit is robust, supply is relatively limited, particularly in the primary market. This strong demand, coupled with a smaller issuance pipeline, means investors often struggle to secure full allocations of favoured issuances and may need to pay a premium in the secondary market.

### Fullerton Fund Management: an experienced solutions provider in the SGD credit market
At Fullerton, we are proud to be one of the key providers of SGD-based investment solutions, with a comprehensive suite of capabilities spanning Singapore equity, Singapore rates, SGD cash, and SGD credits.

In the SGD credit space, Fullerton manages flagship funds with over 20 years of robust performance, demonstrating a consistent track record that reinforces our position as an experienced investment manager in the market. Our scale and established presence grants us deep access to the SGD credit market, supported by strong relationships with brokers and comprehensive market coverage.

Moreover, we understand the unique landscape of the largely unrated SGD credit universe, where rigorous credit analysis is essential. Our dedicated sector analysts bring specialised expertise in SGD credits, evaluating issuers with a comprehensive, forward-looking approach. By relying on proprietary research and sector-specific insights, we are able to assess credit risk more accurately and ensure that our portfolios are adequately compensated for the risk assumed. This commitment to diligent credit selection enables us to build resilient portfolios that generate sustainable, and potentially attractive returns for our investors.
 
¹ Source: Fullerton, Bloomberg, based on amount outstanding of SGD credit issuances as of November 2024. 
² Ibid.

 
Important Information
No offer or invitation is considered to be made if such offer is not authorised or permitted. This is not the basis for any contract to deal in any security or instrument, or for Fullerton Fund Management Company Ltd (UEN: 200312672W) (“Fullerton”) or its affiliates to enter into or arrange any type of transaction. Any investments made are not obligations of, deposits in, or guaranteed by Fullerton. The contents herein may be amended without notice. Fullerton, its affiliates and their directors and employees, do not accept any liability from the use of this publication. The information contained herein has been obtained from sources believed to be reliable but has not been independently verified, although Fullerton Fund Management Company Ltd. (UEN: 200312672W) (“Fullerton”) believes it to be fair and not misleading. Such information is solely indicative and may be subject to modification from time to time.

All information provided herein regarding JPMorgan Chase & Co. (“JPMorgan”) index products (referred to herein as "Index" or "Indices"), is provided for informational purposes only and does not constitute, or form part of, an offer or solicitation for the purchase or sale of any financial instrument, or an official confirmation of any transaction, or a valuation or price for any product referencing the Indices (the “Product”). Nor should anything herein be construed as a recommendation to adopt any investment strategy or as legal, tax or accounting advice. All market prices, data and other information contained herein is believed to be reliable but JPMorgan does not warrant its completeness or accuracy. The information contained herein is subject to change without notice. Past performance is not indicative of future returns, which will vary. No one may reproduce or disseminate the information, whether in whole or in part, relating to the Indices contained herein without the prior written consent of JPMorgan.

J.P. Morgan Securities LLC (the "Index Sponsor") does not sponsor, endorse or otherwise promote any Product referencing any of the Indices. The Index Sponsor makes no representation or warranty, express or implied, regarding the advisability of investing in securities or financial products generally, or in the Product particularly, or the advisability of any of the Indices to track investment opportunities in the financial markets or otherwise achieve their objective. The Index Sponsor has no obligation or liability in connection with the administration, marketing or trading of any Product. The Index Sponsor does not warrant the completeness or accuracy or any other information furnished in connection with the Index. The Index is the exclusive property of the Index Sponsor and the Index Sponsor retains all property rights therein.

The source of the JACI Investment Grade Total Return – SGD Hedged Index is J.P. Morgan Securities LLC, the Index Sponsor. Prior to 1 October 2012, the benchmark was computed by the Managers derived from JACI Investment Grade Total Return Index. The source was changed retrospectively from 8 May 2010.

The 5 Myths of the SGD credit markets de-bunked

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###### By Jmes Durance, Portfolio Manager

A higher yielding world means that investors want more percentage points on that overall return. Investment grade bonds carry more risk than government bonds or money market instruments and have been spectacularly popular over the last two years as a provider of solid returns without the equity market risk of sharp corrections. There are reasons for this, as fixed income fund manager James Durance explains.

Firstly, he says, the strong economic expansion since Covid has been broadening out, and that has encouraged investors to seek risk in equity and credit. But as importantly, the end of ultra-low interest rates has drawn more buyers into fixed income markets.

![global-opportunities-for-quality-income2.png](/uploads/global_opportunities_for_quality_income2_4ea6fb81b5.png)

A second, related trait is borne from the recent mismatch between the supply and demand of bonds.

“If rates are as high as they've been for a long time, companies are going to be less interested in issuing debt,” says Durance. “They would like to refinance at better levels.”

Hence, he says, even those who do refinance, aim for shorter durations in the hope they can wait for rates to fall again.

“Meanwhile there is a terrific amount of institutional demand for bonds from people like ourselves, from alternative asset management, from CLOs, from the private credit market, and so on. The list of buyers just keeps getting bigger, but the supply of bonds at the moment is not keeping up.”

![global-opportunities-for-quality-income3.png](/uploads/global_opportunities_for_quality_income3_a4d4f8544b.png)

What does this mean for investing in this part of the income world this year? Buy for the yield if you want the yield, but be careful about the pricing of investment grade credit relative to other investments. At the start of 2025, there was next to no spread - or the remuneration for the risk of holding them - on investment grade credit over government bonds. Historically, buying at this point in the market has lost you money compared to the return on simple government bonds.

But there is still yield to be found in the market as well as opportunities to maximise it. Durance has swung his attention away from the US, which has looked richly-priced for months, towards Europe and some emerging markets, where solid borrowers can be found at good yields.

“It is possible that Treasury yields and the dollar may have peaked,” he says. “That may mean we are entering a period where emerging market assets can outperform.”

 
This advertisement / publication is prepared on a general basis for information only. It does not have regard to the specific investment objectives, financial situation and particular needs of any specific person who may receive it. You should seek advice from a financial adviser. Past performance and any forecasts on the economy, stock or bond market, or economic trends are not necessarily indicative of the future performance. Views expressed are subject to change, and cannot be construed as an advice or recommendation. References to specific securities (if any) are included for the purposes of illustration only. This advertisement / publication has not been reviewed by the Monetary Authority of Singapore. FIL Investment Management (Singapore) Limited (Co. Reg. No.: 199006300E). Fidelity, Fidelity International, and the Fidelity International Logo and F Symbol are trademarks of FIL Limited.

Global opportunities for quality income

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Author: Kate Lin, CAIA

Last week, we tested a strategy with two [Chinese equity indices](https://sg.morningstar.com/sg/news/211963/does-the-rhyming-%e2%80%9csell-in-may-go-away%e2%80%9d-work.aspx), and talked about how it timing the market makes you lose out on gains over the long-term. The modeling of index returns concluded that botching a market-timing decision does sacrifice a period of (strong) returns. It proved our point – time in the market is better than timing the market.

Tom Lauricella, Editorial Direct for Professional Audience at Morningstar, explains that [ineffective market-timing](https://www.morningstar.com/articles/972119/3-charts-that-show-why-investors-should-stay-the-course-throughout-market-turmoil) efforts can result in a significant opportunity cost and show the effects of missing the one best month on an annual return. “Although successful market-timing may improve portfolio performance, it is very difficult to time the market consistently,” says Lauricella, adding that the long-term gains from US stocks have been demonstrated to offset short-term losses.

Even worse, poor market timing means you give up the chance to gain more from the compounding of reinvested gains, therefore the net effect in an investment strategy is negative when compared to a portfolio that stays the course.

**What is Compounding?**

In a short answer, staying the course is the key to allow the compounding to work out. But what exactly drives compounding. Let’s start with what’s known as the ‘compound interest’ formula:

**End value = Initial value of capital*(1+Rate of change)Time**

1.  Initial Capital determines how much in absolute terms you can gain at a certain rate for a period of time.
2.  Rate of Change or the rate of investment return defines at what pace the initial and reinvested capital is to compound.
3.  Time Horizon defines for how many time periods your assets compound itself.

Put simply, compounding can be explained as the money (or returns) your portfolio earns each year, and then both your initial capital and your returns of previous years earn returns, leading to a point where you have a much larger capital pool. That means, the larger each of the equation’s components (on the right) is, the bigger your total capital would snowball into overtime.

It’s clearer in a side-by-side line graph that plots four scenarios. First, we let the base case (purple line) be a portfolio with a starting capital of $10,000. The portfolio invests in assets at the end of Year 0 that could generate an average of 10% each year and remains the same for the next 35 years.

For each of the remaining three lines, only one variable is adjusted in illustrating the outcome upon a shortened time horizon, a lower rate of return and a smaller capital to start in the equation.

![Elements in compounding.jfif](/uploads/Elements_in_compounding_c94ad1f49c.jfif)


With all else equal, beginning with capital in half means the portfolio will grow at the same rate but arriving at the exact 50% in the end value of the base case.

By contrast, when axing the investment horizon and the rate of return by half, what you afford is a return far less than just half of the base case. Shortening the investment horizon gives up the sessions that the portfolio can compound, while a smaller investment return simply flattens the curve by a large extent. Both result in merely 20% in end value as compared to the base case.

With a view to long-term performance, we go back to the base case of our data simulation and assume that in each calendar an investor adds 10% and 20%, in this case $1,000 and $2,000, to their portfolio (shown as dotted lines).

![Enlarging the compounding effect.jfif](/uploads/Enlarging_the_compounding_effect_64ba5c7108.jfif)


We find that upsizing the total portfolio value on a regular basis takes advantage of the compounding, enabling the portfolios to notch high absolute returns. This is for those who don’t have a large pot of starting investment capital, say at the early stage of their careers. Instead of sitting on cash to save up a sizable amount in some time, it is worth considering starting small to let the compound work. Expanding the capital base can come later by building up a disciplined top-up mechanism to your portfolio.

Indeed, the stock market is seen as a risky investment if you look at it for the short term. Data have shown proof that long-term returns have outsized short-term fluctuations and have triumphed over the risk of missing the one best month on an annual return by betting in and out. In practice, trying to call the trough and the peak of the market prices is distinctly tricky. The strategy involves a great deal of knowledge and luck. For individual investors who lack experience and time in technical research analysis, market timing would then be primarily driven by biases like loss aversion or herd mentality, which may cause some investors to end up buying high and selling low. Staying the course will bear fruit if you endure the time with discipline.

 

 

*©2021 Morningstar. All rights reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided as of the date written, solely for informational purposes; and subject to change at any time without notice. This content is not an offer to buy or sell any particular security and is not warranted to be correct, complete or accurate. Past performance is not a guarantee of future results. The Morningstar name and logo are registered marks of Morningstar, Inc. This article includes proprietary materials of Morningstar; reproduction, transcription or other use, by any means, in whole or in part, without prior, written consent of Morningstar is prohibited. This article is intended for general circulation, and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Morningstar Investment Management Asia Limited is licensed and regulated by the Hong Kong Securities and Futures Commission to provide investment research and investment advisory services to professional investors only. Morningstar Investment Adviser Singapore Pte. Limited is licensed by the Monetary Authority of Singapore to provide financial advisory services in Singapore. Either Morningstar Investment Management Asia Limited or Morningstar Investment Adviser Singapore Pte. Limited will be the entity responsible for the creation and distribution of the research services described in this article.*

How Your Money Works for You

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Author: Carole Hodorowicz

It can be a challenge for investors just getting started to learn how to tackle debt, start saving, or find the best ways to pay off loans. Compounded by the coronavirus pandemic, addressing your financial situation can seem even more daunting when trying to learn the basics. 

We surveyed some of Morningstar's[ Generation Z and millennial employees ](https://www.morningstar.ca/ca/news/202904/generation-z-has-the-right-attitude.aspx)to hear their thoughts around money. Here are five lessons they learnt: 


**1. Paying Down Student Loans**

At the start of the pandemic, [the Government announced](lhttps://www.canada.ca/en/services/benefits/education/student-aid/notice-covid-19.html) measures to help students, including payment freezes.

There are pros and cons to continuing payments, and many good ways to make use of the money, like creating or building an emergency fund. If you contributed to your loans anyway, you reduced your principal. Paying down student loans is typically approached in one of two ways: [the snowball method and the avalanche method](https://www.morningstar.ca/ca/news/206124/how-to-paydown-debt.aspx). The snowball method prioritizes paying off the smallest loans first, while the avalanche method focuses on paying off the loan, no matter its size, with the highest interest rate first.

Here's how one employee took advantage of the grace period:

"As the pandemic happened and the government decided to set student loan interest rates to zero, I prioritized paying off as much as I could each month. I felt that I should try to pay the principal down since I will not have any interest eating away at my overall bill."


**2. Tackling Credit Card Debt**

With fewer ways to spend, some may turn their attention to paying down debt.

When approaching any kind of debt, you may be asking yourself the same question: Where do I even begin? Morningstar's director of personal finance Christine Benz recommends taking these steps first:

1) Buy yourself some time. Does your bank offer any options to extend a grace period or reduce your interest rate?

2) Make a list. How much do you owe, who do you owe, how much time you have, and what are the interest rates?

3) Pick a strategy. Do you want to go with the snowball method or the avalanche method

Here's a takeaway from one employee who focused on credit card debt:

"It's given me a new respect for that feeling of 'getting ahead' on payments. It's given me a chance to think more about my long-term savings goals--when I was so caught up in day-to-day spending, I didn't think as much about what I should be saving that money for instead." 


**3. Creating and Maintaining an [Emergency Fund](https://www.morningstar.ca/ca/news/206579/morningstar-money-challenge-day-7.aspx)**

The pandemic helped highlight the need to be financially prepared for the unexpected.

Our investment specialists recommend these tips to get a solid footing in the event of any unforeseen circumstances:

1) Tally up your monthly living expenses, from rent to groceries. Leave out the nonessential purchases.

2) Multiply these costs by three months. This is the minimum amount you should try to squirrel away.

3) See how much you currently have and set a savings goal.

During this time, many readjusted their focus to their emergency funds. Here's what one employee realized during this time:

"I believe that having a more holistic approach to budgeting is essential. Pre-pandemic, I was only focused on one aspect of my financial plan: paying off debt. Since the pandemic, I realized the importance of building up my emergency fund and having a backup plan in case of an unexpected occurrence." 


**4. Increasing Retirement Contributions**

The pandemic pushed some of our colleagues to look long term and consider how to stay on track for their retirement. Another effective use of the extra time and funds on your side is to focus on investing in your retirement plan. The earlier you invest, the more growth potential your retirement account will have.

Here's how one employee's priorities changed:

"After graduating from college during the pandemic, my biggest concern was finding a way to earn money. Now with a job, I am leaning into more savings, including a six-month emergency fund instead of a three-month and reaching my RRSP contribution limit."

It's never too early to plan for retirement.


**5. Cutting Back**

With office closures and stay-at-home mandates, several employees who responded to our survey said they are rethinking their spending habits during the pandemic. 

Here is how an employee embraced Morningstar's mission to think and invest with the long term in mind:

"I have been spending a lot less in areas that I would have normally spent on and putting more in savings. One thing I hope to do is work on finding a better balance between savings and investing and spending while not feeling like it restricts my lifestyle." 


5 Financial Lessons for New Investors

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Author: Valerio Baselli

Looking at the market today, it's easy to forget where we were at around 15 months ago. Many of the market declines of the past decade or so, including the stock market crash of 2008, are fast becoming faded memories for most of us. But it is the investors who endured these difficult times came out in perhaps the best shape, and as is often the case, those who had the nerve to stay invested were richly rewarded.

And yet, the decision about whether to change your investment strategy or sell a fund is usually not clear-cut, even in hindsight. After the dust has settled on a decision and the investment has performed well or poorly, the “right” answer is wholly dependent on the individual. Selling criteria are not a one-size-fits-all list that fit every investor, but there are some situations when selling is particularly ill-advised. Christine Benz, director of personal finance at Morningstar, picks these three key examples.

**Poor Short-Term Performance**
 
It’s almost never a good idea to sell a fund based on weak performance alone, especially over the short-term. You might have been tempted to sell in last year's market sell-off for example, but we now know the Covid crash was the shortest in history. Instead, if a fund is lagging its peers or an index, your first move should be to investigate why that is. It could be that the manager is simply sticking with an investment strategy that happens to be out of favour, as has been the case with many value-leaning funds in recent years. But weak performance may also be a sign that something more serious is afoot - Morningstar's own research has found that many active funds fail to beat the market over the long-term.

Researching an investment’s fundamentals can be time-consuming, which is why you don't want to get too caught up in investigating short-term bouts of underperformance. Most funds, especially those that are using truly active strategies, will trail their peers at times, often for very good reasons and sometimes for a few years or more (that could be the case with some perfectly solid, defensively positioned funds during a market rally, for example).

Instead, save your energy for checking up on funds when they've underperformed over longer stretches of time or in a period when you would have expected them to perform well. If, for example, you selected a fund because of its low-risk tendencies, but it lost far more than its peers in 2020, that's a legitimate reason to ask whether something about its strategy changed or its risk controls weren’t what you thought they were. And even if the fund isn’t bad, it may not be a good fit in your portfolio.

**Inconsistent Performance**

On a similar vein, investors often get themselves worked up when a fund’s relative returns are inconsistent on a year-to-year basis. Sure, it can be comforting to see a fund land in its category's top half like clockwork—and a small handful of funds has actually managed to generate return rankings that have been remarkably consistent from year to year.

But holding all of your funds to that standard would cause you to kick out some fine offerings that, while not consistent performers on a calendar-year basis, are consistent where it counts: they employ their strategies with discipline and don't waver, even if the market isn't rewarding them in the near term.

It's also important to remember that a calendar year is a fairly short and arbitrary time period, and a fund that has looked erratic over January-December time periods may appear perfectly consistent when measured over a different 12-month time frame—say, from April to March of each year. Investors shouldn't get too hung up on year-to-year performance consistency when deciding what to hold in their portfolios. Looking at annualised returns can be a better way to judge long-term performance, as these smooth out good and bad periods to indicate what average return an investor has received each year. 

**Macroeconomic News**

Macroeconomic news - whether it's the direction of interest rates, rising inflation or GDP growth in China and India - often appears right alongside news about the market's trajectory. And it's true that what's in the headlines has the potential to move the markets up or down on a daily basis, or even over longer time frames. The trouble is that by the time a certain news item makes its way into the headlines, other market participants have already digested it and priced it in.

If you decide to sell your fund based on that news, you're likely to be too late. Instead, a better tack for investors, at least as it relates to their portfolios, is to keep their heads down and focus on factors that they can control: their savings and spending rates, the quality of their investment holdings, and the total costs they pay for those investments. There is much virtue in tuning out the noise when it comes to managing your portfolio.





*©2021 Morningstar. All rights reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided as of the date written, solely for informational purposes; and subject to change at any time without notice. This content is not an offer to buy or sell any particular security and is not warranted to be correct, complete or accurate. Past performance is not a guarantee of future results. The Morningstar name and logo are registered marks of Morningstar, Inc. This article includes proprietary materials of Morningstar; reproduction, transcription or other use, by any means, in whole or in part, without prior, written consent of Morningstar is prohibited. This article is intended for general circulation, and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Morningstar Investment Management Asia Limited is licensed and regulated by the Hong Kong Securities and Futures Commission to provide investment research and investment advisory services to professional investors only. Morningstar Investment Adviser Singapore Pte. Limited is licensed by the Monetary Authority of Singapore to provide financial advisory services in Singapore. Either Morningstar Investment Management Asia Limited or Morningstar Investment Adviser Singapore Pte. Limited will be the entity responsible for the creation and distribution of the research services described in this article.*

3 Bad Reasons to Sell a Fund

The Asia ex-Japan sustainable fund universe encompasses open-end funds and exchange-traded funds that, through their prospectus or other regulatory filings, claim to focus on sustainability, impact, or environmental, social, and governance factors. This article is adapted from a recent report published by Morningstar Sustainalytics and details regional flows, assets, and launches for the third quarter of 2025.

We used the most recent data available within the past quarter for funds whose full quarterly data were unavailable at the time of publication. Because China’s data were not available, we used second quarter 2025 data as a proxy for third quarter 2025 data in every exhibit of this article. After reversing a six-quarter streak of outflows in the first quarter of 2025, China-domiciled sustainable funds returned to outflows in the second quarter of 2025. The outflows were distributed relatively evenly across locally domiciled sustainable funds. ChinaAMC Energy Innovation Equity recorded the largest single-fund outflow. However, the USD 86 million withdrawn represented a relatively small portion of the fund’s USD 1.1 billion in assets under management, which it had accumulated since its June 2017 launch as ChinaAMC’s first ESG fund.

**Flows**

Excluding China, the Asia ex-Japan region experienced USD 1.6 billion in net inflows during the third quarter of 2025, a similar amount to the previous quarter but less than half the level seen in the third quarter of 2024. Inflows were concentrated in South Korea, Thailand, and Taiwan.

South Korea-domiciled sustainable funds saw inflows of USD 1.1 billion. The country’s largest sustainable fund, KIM Credit Focus ESG Feeder Bond 1, continues to dominate inflows, attracting a staggering total of USD 2.0 billion in new subscriptions since the start of 2025.

Meanwhile, Thailand attracted USD 426 million over the third quarter, partly due to ongoing government support, such as special tax deductions for local investors in sustainability-focused funds. For example, the country’s largest sustainable fund, K ESG Sovereign Instruments Fund-ThaiESG, recorded its largest quarterly inflow (USD 187 million) since its July 2024 launch during third quarter 2025.

![Screenshot 2025-10-29 141430.png](/uploads/Screenshot_2025_10_29_141430_cf4487ce5c.png)

In Taiwan, sustainable fund inflows were driven mainly by the market’s largest sustainable ETFs, including Capital ICE ESG 20+ Year BBB US Corporate ETF and Cathay Sustainability High Dividend ETF, with subscriptions of USD 374 million and USD 152 million, respectively. Additionally, Franklin Templeton SinoAm Taiwan ESG High Dividend ETF had a particularly strong quarter, with inflows of USD 139 million. This ETF tracks the ICE NYSE Taiwan ESG High Dividend Recovery Target Index, which includes dividend-paying companies with positive return on equity growth rates, while excluding securities with high ESG risks.

![Screenshot 2025-10-29 141551.png](/uploads/Screenshot_2025_10_29_141551_7c1af06066.png)

Sustainable fixed income funds continued to attract strong inflows of USD 2.3 billion in third quarter 2025 as investors sought resilient returns aligned with rising ESG standards. The consistent inflows into sustainable bond funds have also reflected supportive policy regimes for these types of products, such as in Thailand, and robust and growing issuance in the region.

![Screenshot 2025-10-29 141628.png](/uploads/Screenshot_2025_10_29_141628_6edbea7138.png)

**Assets**

Total sustainable fund assets in Asia ex-Japan (including China) rose modestly by 2% during the third quarter of 2025, reaching USD 80 billion. China remained the largest fund market in the region, holding a 42% share, followed by Taiwan at 37% and South Korea at 10%. South Korea’s market share increased by more than 1% over the quarter, supported by both inflows and strong equity market performance. For context, the Morningstar Korea Target Market Exposure Index gained 13% over the period.

![Screenshot 2025-10-29 141717.png](/uploads/Screenshot_2025_10_29_141717_e4146e8236.png)

By asset class, sustainable fixed income funds continued to gain ground, with assets increasing by 8% during the quarter. Asia ex-Japan sustainable fixed income fund assets have grown nearly fivefold since the third quarter of 2023, while equity fund assets have only increased by about 10% over the same period.

Passive Asia ex-Japan sustainable fund assets stagnated in the third quarter of 2025, while active fund assets posted moderate growth. Year-to-date through September 2025, active sustainable funds slightly regained market share from passive funds, with their share of total Asia ex-Japan sustainable fund assets rising from 42% at the end of 2024 to 44% as of third quarter 2025.

**Launches**

Following a record quarter for sustainable fund launches, only three sustainable funds were launched in the Asia ex-Japan region in the third quarter of 2025, the lowest number since we started collecting this data in 2021. All three launches were China-domiciled passive offerings. Two were open-ended fixed income funds tracking ChinaBond indices – BlackRock ChinaBond Preferred Green Bond Index Fund (with a custom benchmark of 95% ChinaBond-Investment Preferred Green Bond Index and 5% fixed deposit rate) and China Resources Yuanta ChinaBond Green Inclusive Theme Financial Bond Preferred Index Fund (with a custom benchmark of 95% ChinaBond Green Inclusive Theme Financial Bond Preferred Index and 5% fixed deposit rate).

The remaining launch was E Fund SSE STAR Market New Energy ETF, which tracks an index comprised of the 50 largest new energy stocks listed on the STAR Market, including those involved in new energy power generation and new energy vehicles.

![Screenshot 2025-10-29 141755.png](/uploads/Screenshot_2025_10_29_141755_f9b30f8bde.png)

**Regulatory Update**

In the third quarter of 2025, regulatory and governmental bodies advanced ESG-related initiatives relevant to asset managers in the Asia ex-Japan region.

In July, South Korea’s Financial Services Commission expanded the universe of firms required to disclose corporate governance information from 541 companies with assets greater than KRW 500 billion (USD 352 million) to all 842 constituents of the KOSPI starting in 2026. In the same month, a lawmaker proposed a bill to increase disclosure requirements for private equity funds, including quarterly asset management reports. These proposals are part of a broader effort to improve corporate governance standards and bolster international investor confidence.

In August, China’s State Administration of Foreign Exchange launched a new pilot program to encourage green foreign debt financing, allowing non-financial firms to raise overseas funds for investment in qualified green and low-carbon projects. In September, President Xi Jinping announced climate pledges that include cutting emissions by 7–10% by 2035, and expanding wind and solar power capacity to more than six times 2020 levels. These commitments may drive further sustainability-related regulatory initiatives in China in the years ahead.

For the full report, please visit:[ Global Sustainable Fund Flows: Q3 2025 in Review](https://www.morningstar.com/business/insights/research/global-esg-flows)

Asia ex-Japan Sustainable Fund Flows: Q3 2025 in Review

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## Key Takeaways
- All investments carry risks. Before investing, always ask yourself, “Sure or not?”
- Check that the [entity](https://eservices.mas.gov.sg/fid) or [individuals](https://eservices.mas.gov.sg/rr) regulated by the Monetary Authority of Singapore (MAS)
- Check for red flags. Be wary of opportunities that offer high returns at little or no risk. Most of us would have read about news reports of people who were scammed. People continue to fall victim as scammers constantly come up with new, convincing ways to steal what is often very large amounts.

## Common Investment Scams

Have you encountered any of these situations?

Self-initiated investment scam variant: While searching for investment opportunities online, you find one that promises to be lucrative. It could even be an ad you chance upon on social media platforms touting profitable "investment opportunities".

<iframe width="560" height="315" src="https://www.youtube.com/embed/UgFF_nuB9N0?si=mnrBohDNS3GX7N8-" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

Chatgroup addition investment scam variant: Out of nowhere, you are added to a group chat where people are sharing their windfall from a not-to-be-missed investment.

<iframe width="560" height="315" src="https://www.youtube.com/embed/ilTdLNrvl34?si=rVEnytOivYFaA8pJ" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

Befriending investment scam variant: Your new online friend who shares your interests starts telling you about an exclusive investment opportunity.

<iframe width="560" height="315" src="https://www.youtube.com/embed/nNOajUqDPi0?si=J_wf8lAyq2hG0eo-" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

Sounds familiar?

In many instances, victims thought they would never get scammed – sometimes they use the profits they receive initially to refute disbelieving loved ones. But criminals have become extremely skilled at convincing people that get-rich-quick scheme is real and high returns are within easy reach. Always remember to ask, “Sure or not?” and conduct checks to safeguard your hard-earned money! Here's what you should check.

### Check That The Entity Is Regulated

Some investment scams may even claim to be regulated by the relevant authorities to mislead you.

Confirm such claims by checking the resources on the Monetary Authority of Singapore (MAS) website.

- [Financial Institutions Directory](https://eservices.mas.gov.sg/fid) - a list of financial institutions regulated by MAS and the regulated activities they are authorised to provide
- [Financial Institution Representatives Register](https://eservices.mas.gov.sg/rr) - a list of individuals who conduct activities regulated by MAS
- [Investor Alert List](https://www.mas.gov.sg/investor-alert-list) - a non-exhaustive list of persons unregulated by MAS who may have been wrongly misperceived as being licensed or authorised by MAS

Remember, [dealing with an unregulated entity](https://www.moneysense.gov.sg/dealing-with-unregulated-persons/) means giving up the safeguards offered under the laws administered by MAS.

### Check On The Company's Background

Do not be too quick to believe everything you are told. Verify information provided by the entity about themselves or the investment opportunity, such as the background of representatives and the entity's track record.

It is also important to ask the entity as many questions as you need to fully understand the investment opportunity. If it is unable to answer or avoids answering any of your questions, be wary.

If you suspect that you are a victim of scam, inform your bank and file a police report immediately.

Tell your family and friends about investment scams so that they do not fall prey to them.

### Check For Red Flags

Scammers use sophisticated tactics to get you to part with your money. There are red flags you can watch out for to steer clear of investment scams.

#### 1) High Returns At Low Or No Risk

Be wary when you encounter an investment opportunity that claims to guarantee or protect your capital while promising high returns. The greater the promised investment returns, the higher the risks should be. Many investment scams use lucrative promises to lure investors in

#### 2) Pressure Tactics

- "Limited time only! Invest before it sells out!"
- "Special rates for first 50 investors. Don't miss out on this golden opportunity!"
- "More than 2,000 people have invested - what are you waiting for?"
- "Invest today and get extra 10% credit with many other benefits."

Limited offers, timed gifts or rebates, are common tactics in investment scams to rush you into committing your money.

Make sure you fully understand what you are buying into instead of focusing on the carrots dangled.

#### 3) Offer Of Commissions

Legitimate investment schemes generally do not offer commissions to investors for referrals.
Investment scams use such incentives to encourage existing customers to bring in their friends and associates to quickly enlarge their investor base.

#### 4) Fictitious Track Records

Investment scams may claim to have many years of experience, multiple accolades or simply large investment profits to gain trust.

Some use testimonials from "satisfied customers" to shore up their credibility.

You should approach claims with healthy skepticism. Where possible, verify the claims with an independent third party.

Remember, if an investment sounds too good to be true, it probably is.

### Safeguard Yourself Against Scams

To ACT and safeguard yourself against scams:

**ADD:**

- Privacy settings to your messaging app to avoid being added into unknown chatgroups
- Security features such as 2 or multi-FA for banking apps, transaction limits on payment accounts (bank, PayNow, PayLah)
- Money Lock to your bank accounts to further secure a portion of your savings


**CHECK:**

- Resources on the MAS website (i.e. Financial Institutions Directory, Register of Representatives, and Investor Alert List) on whether the company offering the investment opportunity is regulated by MAS
- With someone you trust about the offer
- Call the ScamShield helpline (1799) to check if you are unsure
- Call the official hotline of the company to check if this investment product is legitimate

**TELL:**

- Warn friends and family about this scam encounter
- Report aFor information on other scams and how to safeguard yourself against them, you may visit scamshield.gov.sg.nd block suspected scam accounts/ chat groups
- Call your bank immediately and make a police report if you think you have fallen victim

For information on other scams and how to safeguard yourself against them, you may visit [scamshield.gov.sg](https://www.scamshield.gov.sg/).

Stop! Do not fall victim to the scammers!

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###### Fullerton Market Update - April 2025


#### Executive Summary:

•	China properties used to dominate the issuance action and broader direction of the Asian Fixed Income (AFI) markets, but this is no longer the case. 

•	The sector now comprises a much smaller fraction of the wider AFI universe. 

•	Single-sector overdependence and index sector concentration was an issue historically -leading to weak diversification and vulnerability in downturns. 

•	The income attraction of Chinese properties as a standalone sector has declined. 

•	To build sustainable income streams in AFI portfolios going forward, investors need to re-imagine their approach to this universe. 

•	A diversified portfolio of various fixed income sub-segments and income generation sources (organised along their income generation profile and capacity) may be the “way to go”. 

•	This can be executed via a flexible, best ideas, multi-specialists, team-based approach for opportunities across the economic cycle. 
 

#### How will the Asian Fixed Income markets reemerge from the shadow of the Chinese property sector meltdown?


##### Background

Prior to 2020, Chinese properties were a large part of the Asian Fixed Income (AFI) and Asian High Yield (AHY) universe. They dominated the issuance action and drove the wider direction of the AFI markets. As of December 31, 2019, China credits and Chinese property constituted c. 54% and 37% of the JACI Non-Investment Grade Index¹ respectively. Moreover, its high yield nature was appealing to Asian fixed income investors seeking regular and high-income payouts at that point, the concentrated country and sectorial exposure notwithstanding.

All this changed abruptly in 2020 with the rollout of the “three red lines” policy that was intended to address excessive leverage in China’s property developers. The heightened regulatory posture was in-line with what would later be known as the government’s “common prosperity” drive, and this expanded to other areas like tech and education.

The increased scrutiny led to tightening credit conditions within property developers, mounting liquidity issues, halted construction projects, weaker home pre-sales, mortgage boycotts, delayed home deliveries, and a general weakening of sentiment towards the sector. Reports of rating downgrades, and credit defaults intensified, impacting even the larger property developers and State-owned related names.

Measures were subsequently introduced to stabilise the market, such as reducing mortgage rates and easing of home purchase restrictions, but investor confidence had already eroded. With the onshore and offshore funding channels narrowing or even closed, this sector has since become a smaller part of the wider AFI universe, impacting investors behaviour towards this market in the process.

Today, as of 19th February 2025, China credits and Chinese property names constitute c. 22% and 7% of the JACI Non-Investment Grade Index² respectively, a significant decline from its heydays.
 
## Implications and lessons learnt from China’s property sector consolidation


China’s policymakers increased scrutiny on the real estate sector was meant to be a balancing act aimed at managing systemic risk, while also upholding measures to ensure the long-term health of the property market and housing affordability.

While its resolve to execute structural reforms to pivot away from an over-reliance on this credit-intensive sector should not be underestimated, investors may have underappreciated the far-reaching consequences of the prolonged correction in the housing market, on both the wider economy and financial stability. The impact of the correction has extended to related upstream and downstream sectors as well - such as furniture companies and construction entities. This ripple effect has further dampened private sector confidence. Additionally, the negative wealth effect stemming from weak property sales and declining property prices has created a negative feedback loop, weighing on China's domestic consumption and reinforcing deflationary pressures.

Another lesson gleaned from the Chinese property saga is the overdependence on Chinese property developers for yields. The tumultuous period since 2021 underscores the issue of sector index concentration risk, which has accumulated over time. With the downturn and high concentration risk in the sector, this has led to many investors in this space underperforming. The experience from this episode highlights the need for investors to diversify – even amidst a backdrop of ultra-low interest rates, where the inclination to chase higher income and yields were very high.

The home and cultural biases of Asian fixed income investors was also evident, in that investors in this space were to some extent coloured by China's then robust growth figures, which disproportionately directed them to favour Chinese property bonds. This led to significant issues when the sector underwent a downturn.
 
## What’s next – how should investors re-imagine their investing approach to the AFI and AHY universe?
With Chinese properties no longer being the cornerstone for high-yield bond issuance in the AFI market, we must confront the new reality that the income attraction of this space as a standalone has receded. Investors who used to access this space for its high-income potential may need to reevaluate their approach.

How should one construct an Asian credit portfolio that is still high-income oriented? First, it is critical to recognise that the Asian credit and AHY markets have irretrievably changed. Excluding China property, the AHY index currently has sector concentration in Macau gaming (at 10%) and Indian renewables and commodities (at 9%)³ . Although the weightings are lower than what China Real Estate’s weight was during its peak, the current opportunity set is not sufficient to build a sufficiently diversified AHY portfolio.

In our view, we need to spread our risks over multiple fixed income segments and functional buckets (organised along their income generation potential capacity) – i.e. one bucket that classifies instruments by their ability to generate consistent and stable income (Income Stabilisers); another that groups income-paying securities by their low correlation traits (Income Diversifiers); and another bucket which comprises of high-conviction income-paying securities (Income Generators). The approach is then to adopt a conscious high income-oriented mindset via allocation across these functional buckets by considering each bucket’s income contribution attributes on its own merits, and how it can complement the wider portfolio. This can be executed via a flexible, best ideas, multi-specialists, team-based approach. This way, one may potentially build a high-income paying portfolio that is diversified across multiple income streams, and not disproportionately reliant on one sector.

Over a cycle, we believe this approach of diversifying income generation sources, should outperform an investing method that is concentrated in HY assets. This approach has the added benefit of tapping into different economic cycles and opportunities. The adoption of a team-based decision-making processes further strengthens and enhances the final outcome. A diverse team provides a variety of perspectives, challenges the status quo and reduces individual biases. This approach leads to more balanced decision-making framework, reducing the impact of overconfidence and heuristic biases. Relative to a concentrated HY approach, global diversification with an Asia core as a focus will be key.
 

¹ Source: JP Morgan Asia Credit Index (JACI), December 2019 
² Source: JP Morgan Asia Credit Index (JACI), February 2025 
³ Source: JP Morgan Asia Credit Index (JACI), 19 February 2025 

 
Important Information

No offer or invitation is considered to be made if such offer is not authorised or permitted. This is not the basis for any contract to deal in any security or instrument, or for Fullerton Fund Management Company Ltd (UEN: 200312672W) (“Fullerton”) or its affiliates to enter into or arrange any type of transaction. Any investments made are not obligations of, deposits in, or guaranteed by Fullerton. The contents herein may be amended without notice. Fullerton, its affiliates and their directors and employees, do not accept any liability from the use of this publication. The information contained herein has been obtained from sources believed to be reliable but has not been independently verified, although Fullerton Fund Management Company Ltd. (UEN: 200312672W) (“Fullerton”) believes it to be fair and not misleading. Such information is solely indicative and may be subject to modification from time to time.

All information provided herein regarding JPMorgan Chase & Co. (“JPMorgan”) index products (referred to herein as "Index" or "Indices"), is provided for informational purposes only and does not constitute, or form part of, an offer or solicitation for the purchase or sale of any financial instrument, or an official confirmation of any transaction, or a valuation or price for any product referencing the Indices (the “Product”). Nor should anything herein be construed as a recommendation to adopt any investment strategy or as legal, tax or accounting advice. All market prices, data and other information contained herein is believed to be reliable but JPMorgan does not warrant its completeness or accuracy. The information contained herein is subject to change without notice. Past performance is not indicative of future returns, which will vary. No one may reproduce or disseminate the information, whether in whole or in part, relating to the Indices contained herein without the prior written consent of JPMorgan.

J.P. Morgan Securities LLC (the "Index Sponsor") does not sponsor, endorse or otherwise promote any Product referencing any of the Indices. The Index Sponsor makes no representation or warranty, express or implied, regarding the advisability of investing in securities or financial products generally, or in the Product particularly, or the advisability of any of the Indices to track investment opportunities in the financial markets or otherwise achieve their objective. The Index Sponsor has no obligation or liability in connection with the administration, marketing or trading of any Product. The Index Sponsor does not warrant the completeness or accuracy or any other information furnished in connection with the Index. The Index is the exclusive property of the Index Sponsor and the Index Sponsor retains all property rights therein.

The changing face of Asian Fixed Income investing

Saving and Investing are two terms that are often used interchangeably, but they are actually different tactics that go hand-in-hand to help you reach your financial goals. Savings typically are intended for a rainy day or short-term goals, while investing involve an asset purchase that you believe may generate a return over time. Watch the video to learn more.

The Difference Between Saving and Investing

The how, what, and why of cryptocurrency.

A joint initiative of IMAS and LIA