Sberbank : Sber Asset Management launches new product for quality high-yield bonds

Sber Asset Management is launching High-Yield Bonds (USD), a new discretionary asset management strategy for qualified investors enabling them to invest in quality high-yield bonds issued by developing countries such as Brazil, China, India, Indonesia, and more[1].

Issuers with a credit rating of B+ to BBB- will be included in the bonds portfolio. Bonds rated BB[2] and in possession of the best yield-risk ratio will serve as the main asset. The company's analysts developed a special scoring model allowing them to select the most attractive bond issues. This is determined by comparing the credit premium and fundamental indicators such as an issuer's credit rating, debt burden, liquidity, the profitability of the company, the national and industrial affiliation of the issuer, and the company's recent newsfeed.

A counter-cyclical approach is used in the strategy's investment process, facilitating additional yield while the market is recovering, as risk assets depreciate more during a crisis. Managing credit risk in the portfolio helps increase yield. The model portfolio's yield stands at 3.85%, provided that the bonds mature within 3.7 years. The minimum investment is USD 15,000.

This strategy uses an active management model for national and industrial structures and portfolio credit risk and urgency depending on the market situation in order to maximize yield. This is the advantage of the new strategy's active management method compared to ETFs. It is also important to note that diversification and thorough credit analysis of issuers facilitates the reduction of a portfolio's credit risk and volatility. High-yield bonds are a risk asset, but if that risk is properly managed, it can lead to higher yield than other types of investments.

Renat Malin

Investment Director, Sber Asset Management

[1] Clients will be able to invest in securities under the strategy by acquiring interval fund shares from financial instruments under the management of Sber Asset Management, whose investment declaration entails investing in foreign-issued bonds.

[2] A higher-quality high-yield bond segment.