Hillhouse Capital and Tencent’s investment management joint venture, GaoTeng Asset Management, is set to launch its first product.

Asia’s largest alternatives manager and the Chinese internet giant teamed up more than a year ago to establish GaoTeng in a bid to service the huge number of Chinese investors looking to diversify outside the mainland.

The Hong Kong-registered investment firm will begin trading  in the second week of this month after raising at least HK$100m according to GaoTeng’s Beijing-based spokesperson Emily Duan.

Wayne Bi, the CEO at GaoTeng, said his group decided to have fixed-income fund as its first product given that safety is a top priority for oversea investment.

“Our end investors are more familiar with the Greater China market, so we believe an Asian fixed-income fund is the optimal choice,” he said.

At least 70% of the portfolio will invest in Asia-Pacific debt securities but the remainder can be invested in relative value opportunities in other markets.

The fund will be managed by veteran fixed income investor Wonnie Chu, who previously worked at Harvest Global Investments, MetLife, Moody’s Investors Service and Lehman Brothers in Hong Kong. She had managed at one time a $2.5bn fixed income portfolio including the largest CNH fund in Asia.

The fund will pursue bottom-up fundamental research and valuation analysis, combined with top-down macro analysis and strict risk management.

Chu said US dollar-denominated Chinese bonds benefit from the strong dollar and higher interest rates, and that Asian bond markets have delivered attractive yields notwithstanding the uncertainties in the global economy. Furthermore, she added yield on US dollar-denominated Chinese bonds have increased by 125 bps so far this year with investment grade bonds returning 5% or more.

Chu said fixed-income instruments are particularly appealing in market, largely due to low economic growth and moderate inflation. She cited the IMF’s recent downgrade of global economic growth forecast from 3.9% to 3.7% for this year given the growing trade tension between the US and China. Chu nonetheless said the effect of trade tension will vary from one company to another, and that those with sound fundamentals and stable cash flow are still worth investing into.

China’s CITIC Bank and Essence International Securities (Hong Kong) are listed as retail distributors for the product but more vendors such as banks and security firms will be joining the list in the future.

Hillhouse and Tencent JV launches first product on AsiaHedge.