We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is an Asian Bond Fund?

By Lindsey Rivas
Updated Feb 22, 2024
Our promise to you
WiseGEEK is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGEEK, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

An Asian Bond Fund is a fund that consists of bonds issued by sovereign Asian entities. It was created by the Executives' Meeting of East Asia and Pacific Central Banks (EMEAP) to improve the Asian bond market. The first Asian Bond Fund initiative (ABF1) for issuing those bonds occurred in 2003, followed by a second initiative (ABF2) in 2005. The fund is managed by the Bank for International Settlements.

This type of bond fund gives Asian investors the opportunity to invest in financial assets that provide return benefits to the region. Some of these benefits include improved financial stability for EMEAP members and more efficient financial intermediation, in which the needs of lenders and borrowers are reconciled. The bonds can be bought directly by large investors, or they can be purchased by individuals though mutual funds.

The Asian bond market helps to finance the developing infrastructure in the region. The expansion of the Asian bond market reduces dependence on short term bank loans, which have historically caused economic failure in some Asian countries. Recently, however, sovereign Asian bond issuers have generally had a higher credit rating than other regions because of low political risk and strong economic support. As a result, most Asian bonds have a rating of investment grade.

ABF1 was launched in June 2003 using seed money of $1 billion US Dollars (USD) from the combined reserves of the 11 central banks that make up EMEAP. The seed money was invested in bonds issued by eight of the EMEAP members, and the bonds were issued in US dollars. The first Asian Bond Fund initiative allowed the EMEAP members to work together to build consumer trust and confidence in the organization.

ABF2 occurred in the spring of 2005. For the second initiative, $2 billion USD was invested in bonds of eight EMEAP members, but the bonds were issued in denominations of local currency instead of in US dollars as they were in ABF1. The investments that were part of the second initiative included nine Asian Bond Funds. All of the funds were passively managed index funds that used the International Index Company as the index provider. ABF2 was deemed necessary because the Asian bond market was still underdeveloped at that time.

Asian Bond Funds were created by the 11 central banks and monetary authorities in East Asia and the Pacific region that make up the EMEAP group. The countries with banks that are members of EMEAP are Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, and Thailand. The regional organization allowed the banks to work together to provide monetary resources to finance the Asian Bond Fund initiatives.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.