This week in asset owner history: APG launches China bond strategy
On November 29, 2019, APG Asset Management launched its first China fixed income strategy.
The firm that invests Dutch pension savings built a China fixed income team and set up branches in Beijing and Shanghai, amid a rapid recent buildout in Asia.
This expansion was “a strategic step”, Sandor Steverink, head of treasuries at APG, told AsianInvestor in November 2019, “since we expect the Chinese financial markets to grow continuously and [that they] may become as important as the financial markets in the US and the eurozone”.
As of end 2021, Chinese fixed income accounted for €87 million of the portfolio and had returned 16.3% during 2021. As of end 2020 -- the first year APG listed Chinese fixed income as a separate asset type in their annual report -- the value was €75 million with an annual return of 0.4%.
The fixed income desk is headed by Gregory Suen, who started in October 2019, and the desk is based in both Beijing and Hong Kong. On top of these locations, APG also has an office in Shanghai.
Suen told AsianInvestor in March 2021 that China’s bond market offers a unique opportunity for aspiring foreign investors, noting that it is “very rare, or never happens, that a new market has such size and depth”.
“Compared with China equity, investing into the fixed income assets in the country for foreign investors is fresher. We don’t have a planned figure so far but we do plan on expanding given the attractiveness of the market,” he said.
APG is partnering with Chinese asset management firm E Fund on its China fixed income portfolio. In addition, APG teamed up with E Fund on its A-share strategy in China, starting in early 2018.
The China fixed income strategy also incorporates the responsible investment policies of APG’s pension fund clients. These include the aim of increasing investments into assets that contribute to the United Nations’ Sustainable Development Goals.
Investing on behalf of four Dutch pension funds, APG had €636 billion by the end of 2021.