With yields on fixed income globally set to remain low, Asia and emerging market bonds and credit offer attractive returns, a portfolio manager at Fidelity International told CNBC.
"One of the key attributes when we think about investing here in Asia -- be it Australian government bonds, Korean government bonds, Asian U.S. dollar-denominated corporate and sovereign bonds and even thinking about Chinese renminbi-denominated government bonds -- is that you're getting yield," Bryan Collins, a fixed income portfolio manager at Fidelity, told CNBC's "Squawk Box."
"You're getting a relatively attractive risk adjusted return when you compare it to other markets around the world," he said.
It's no small difference. The benchmark 10-year Japan government bond was yielding around a negative 0.271 percent on Tuesday, while the German 10-year bond was at negative 0.1609 and the U.S. 10-year Treasury yield hovered around 1.45 percent. That compared with 10-year Indian and Indonesian local currency government bonds yielding upward of 7 percent.
Fidelity International, which had $272 billion in assets under management, has seen strong demand for investments in Asian and emerging market sovereign and corporate credit fixed income, said Collins, who manages Fidelity's Asian HIgh Yield Fund and China Renminbi Bond Fund. U.S.-based Fidelity Investments had $2.036 trillion in total managed assets at the end of last year, with $1.738 trillion of that in its own mutual funds.
According to data from JPMorgan, around $3.3 billion flowed into emerging market bonds in the week ended July 7, totting up around $12.1 billion in inflows year-to-date, compared with outflows of more than $14 billion last year.
The U.S.-based Fidelity New Markets Income Fund, an emerging market bond mutual fund, had net assets of around $4.53 billion as of the end of June; it's returned 13.33 percent year-to-date. Its one-year return as of the end of June was at 9.77 percent, compared with the JPMorgan Emerging Market Bond Index Global rising 10.32 percent over the same period, according to Fidelity's website.
The relatively stronger fixed income returns in Asia and other emerging markets appeared set to continue, Collins said, citing expectations that the U.S. Federal Reserve wouldn't be hiking interest rates anytime soon.
Typically when the U.S. tightens its monetary policy, funds would flow into the greenback, which would weaken emerging market currencies and spur concerns about whether those countries will be able to service their dollar-denominated debt.
"As the Fed hike prospects get pushed out further -- and there's really no rate hike priced in this year at this stage -- it does provide corporates right around Asia and other emerging markets with a lot of comfort and stability that any kind of currency mismatch or strong dollar environment is really going to be a relatively benign one," Collins said.