Invesco has launched a Belt and Road fixed income fund looking to capture investment opportunities from Chinese President Xi Jinping's 2013 initiative.
The Invesco Belt and Road Debt fund will invest primarily in US dollar-denominated sovereign, investment grade and high yield corporate bonds from issuers that directly or indirectly benefit from China's development strategy.
Launched in 2013, the initiative was rolled out by China to promote the land and sea connectivity in Asia, Europe and Africa.
The fund can invest up to 10% in equities from the Belt and Road region and has the ability to move to 30% cash in periods of higher risk.
It will adopt a top-down and bottom-up investment approach with the ability to invest across the 68 countries the initiative will impact.
Ken Hu, CIO, fixed income, Asia Pacific, at Invesco, will be lead manager, however due to the wide range of potential themes and sectors, he will draw on the firm's range of specialists.
Hu commented: "The Belt and Road initiative sounds very China-centric, but it is actually a great opportunity for fixed income investors with a multi-regional outlook.
"The fact the Belt and Road Initiative was written into the Chinese Constitution in 2017 ensures that it will remain a long-term priority for government authorities and private enterprises.
"In addition, as trade tensions with the US rise, China's commitment to the Belt and Road Initiative should deepen and as the US, EU, UK and Japan are increasingly competing with China on direct investments in the Belt and Road region, the recipient countries would benefit from capital inflows."
Sergio Trezzi, head of retail distribution EMEA (ex-UK) and Latin America, added: "Demand for thematic investment is growing in the European markets, in particular in the wealth management channel, considering the longer-term investment opportunities coming from macro, social and cultural trends."