The Aberdeen Select Portfolio – Aberdeen Asian Local Currency Short Duration Bond Fund is a fund that was made available in Singapore a few months back by fund house Aberdeen Fund Management.
The underlying fund invests at least two thirds of its assets in short duration (maturity of three years or less) debt and debt-related securities denominated in Asian currencies and issued predominantly by Asian governments, supranational institutions or government related bodies.
Due to the short duration of the fund, it also has a nickname called “Shorty”.
In a rising interest rate environment, bonds will usually not do too well. In order to insulate a bond portfolio from the effects of rising interest rates, one of the strategies employed by fund managers is to underweight the duration of their bond holdings.
If investors are concerned about the duration exposure of their bond funds, they can also dynamically allocate some of their bond holdings to short duration bond funds. The Aberdeen Asian Local Currency Short Duration Bond Fund is one such fund.
Aberdeen itself is bullish on Asian bonds and say that Asian bonds and currencies are the new safe haven.