While the world looks West, returns are shifting East

THE default investment portfolio looked roughly the same for years. Heavy in US equity and global investment-grade bonds, anchored to familiar names and familiar benchmarks, with Asia tucked into the margins, if at all.

It was a reasonable playbook, and for a while, it worked.

That playbook is under pressure. US rates have swung unpredictably, fiscal deficits are widening and inflation, while off its peak, has proven stubborn enough to keep the Federal Reserve cautious and markets on edge.

Meanwhile, the conditions that made Asia easy to overlook have quietly reversed. Across most of the region, inflation was running below central bank targets entering 2026, with China and Thailand in outright deflation.

Asian central banks have the flexibility to stimulate growth if support is needed. For income-focused investors, this backdrop has made Asian credit, and in particular the BlackRock Asian Tiger Bond Fund, a compelling option worth a closer look.

This divergence from the US rate cycle matters. Asia’s bond markets are less exposed to the same pressures. Corporate fundamentals are not being eroded to the same extent. Asian assets are better placed, with lower inflation and policymakers that still have room to act.

Geopolitical tensions add uncertainty, but most Asian companies are focused on local markets, which makes them less exposed to global shocks.

Then there is the structural story. Asia sits at the intersection of every major theme shaping global investment in 2026.

The artificial intelligence build-out runs on the “Halo” complex: hardware, automation, logistics and other physical enablers.

SEE ALSO

Asia’s different economic stories are opening up opportunities in fixed income

BlackRock's GIP teams up with Temasek, Abu Dhabi heavyweights to target US$30b in infrastructure deals

BlackRock launches Asean equity strategy under EQDP, with a small and mid-cap focus

China, Japan and South Korea anchor the bulk of this infrastructure. South and South-east Asia are driving consumption and labour growth. Supply chains are reconfiguring around the region.

These are not short-term catalysts. They are the foundations of a multi-year reallocation.

“Asia enters 2026 in a position of further strength,” said Dennis Quah, managing director and head of wealth for Singapore at BlackRock.

“The conversations we are having with investors globally reflect a real shift. Not a tactical rotation into Asia, but a growing recognition of what the region offers.

“During times of policy uncertainty, coupled with improving fundamentals and valuations, this has led to investors coming back to Asia.”

The question for investors is no longer whether Asia belongs in the portfolio. It is how to access it, and with whom.

For income, BlackRock’s Asian Tiger Bond Fund is one possible approach into Asian credit. For growth, BlackRock Advantage Asean Equity Fund provides structured exposure to one of the world’s most dynamic regions.

For income: Asian credit has structurally changed

Asian credit has long been overlooked by global investors, and for one main reason: China property.

The 2021 Evergrande default left a deep impression on global investors, many of whom quietly conflated Asian credit risk with China property risk. That is no longer the case.

Default rates across the region have been trending lower. Today, Asian credit offers a rare combination: attractive yields, lower interest-rate risk, and exposure to economies with more supportive policy paths than the US.

Duration positioning matters, too. Rates remain unpredictable, but not all parts of the market carry equal risk.

Longer-dated bonds are more exposed to fiscal pressures and shifting rate expectations. Asian credit focuses on shorter to medium maturities, where returns are more stable and volatility is lower.

The BlackRock Asian Tiger Bond Fund takes exactly this approach, targeting medium-term, high-quality bonds to capture competitive returns.

Performance has ranked first quartile over one, two and three-year periods (source: BlackRock, Bloomberg and Morningstar as at Apr 30, 2026. Peer group is Morningstar category = Asia bond, base currency = USD).

That record is particularly notable given the strength of Asian credit broadly, which itself has outperformed both global and US credit across two major economic shocks in the past three years ended April 2026. 

“The starting point for Asia really matters when you evaluate the range of outcomes,” said Navin Saigal, head of global fixed income for the Asia-Pacific at BlackRock.

“Inflation in most Asian countries was running below central bank targets entering 2026, while several bond markets were pricing in rate hikes, including South Korea, Japan, India and Australia. That stands in sharp contrast to the US.

“For long-term investors, structural divergences in growth, inflation and policy make Asian duration and income not just a tactical opportunity, but an increasingly strategic complement to global fixed-income portfolios.”

What sets the fund apart is its ability to invest beyond the standard Asian credit index.

BlackRock’s regional research capabilities cover sectors outside traditional indices, including Australian securitised assets for high quality (AAA-rated) and low-duration risk (floating rate), local currency credit for relative value opportunities, convertible bonds for both equity upside and bond protection, and privately structured financing that typically offers stronger protections and higher yields.

For investors benchmarked against US investment-grade credit, the case for rebalancing is not about taking more risk. It is about finding better returns for the same level of risk in a market that has moved on from the China property crisis that once defined it.

For growth: Asean deserves a deliberate allocation

Asean’s problem in global portfolios has never been performance potential. It has been invisibility.

Traditional Asia allocations skew towards China and North Asia, leaving Asean as incidental benchmark exposure rather than a considered position.

Spanning 10 diverse economies, Asean has a combined gross domestic product of over US$4 trillion, making it one of the most dynamic growth engines globally.

BlackRock is one of the fund managers appointed under the Monetary Authority of Singapore’s S$6.5 billion Equity Market Development Programme.

The BlackRock Advantage Asean Equity Fund is BlackRock’s expression of that mandate, built for investors who want disciplined, scalable access to one of the world’s most dynamic growth regions.

“Return drivers across countries, sectors and individual stocks in Asean are significantly different from one another. That is not a complication. It is the source of the opportunity,” said Quah.

“What works is a disciplined, research-intensive approach that can consistently identify where the real value sits.”

The BlackRock Advantage Asean Equity Fund seeks to identify the winners in exactly this kind of market.

Managed by BlackRock’s systematic active equities team, built on over 40 years of quantitative research, it draws on fundamentals, market sentiment and macro themes across a universe of approximately 350 stocks, including local-language data across 47 languages to capture country-specific nuances.

AI and machine learning support stock-level insights, with experienced human judgment applied on top.

BlackRock’s pan-Asian investment team manages over US$20 billion across the region, with more than 40 years of experience in systematic investing.

With roughly 46 per cent (as at end-April 2026) allocated to Singapore equities and meaningful exposure across Indonesia, Malaysia, the Philippines and Thailand, the fund offers both developed market stability and emerging market growth in a single vehicle.

The investor decision

Uncertainty has a way of keeping investors on the sidelines. The instinct is to stay put, wait for clarity, and rebalance later. But in Asia right now, sitting on the sidelines carries its own risk.

“BlackRock manages approximately US$14 trillion globally and our insights come from real conversations with investors around the world,” said Quah.

“The shift towards Asia is becoming more visible, particularly at the institutional level. The question for every adviser and investor today is whether their portfolio reflects that reality yet.”

Brought to you by:

In Singapore, this material is issued by BlackRock (Singapore) Limited (company registration number: 200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. All financial investments involve an element of risk. Investors may not get back the amount they invest. 

The Fund(s) may use or invest in financial derivatives and may have exposure to Additional Tier 1 (“AT1”) and Tier 2 capital instruments. Investors are advised to carefully review the risk disclosures in the Singapore Prospectus before investing. This is for informational purposes only and does not constitute an offer or invitation to anyone to invest in any funds and has not been prepared in connection with any such offer. BlackRock (Singapore) Limited has been appointed as the Singapore Representative and agent for service of process in Singapore. Subscriptions in the Fund(s) are valid only if made based on the current Prospectus and the most recent financial reports which are available on our website www.blackrock.com.sg. 

Investors may wish to seek advice from a financial adviser regarding the suitability of the Fund before making a commitment to purchase units in the Fund. In the event an investor chooses not to do so, the investor should consider whether the Fund is suitable for him.  

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are for illustrative purpose only. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. 

©2026 BlackRock, Inc. or its affiliates. All Rights Reserved.