Bloomberg News

Kokusai, Asia’s Biggest Bond Fund, Sticks With Bet on Italy

July 13, 2011

July 13 (Bloomberg) -- Kokusai Global Sovereign Open, Asia’s biggest debt fund, is sticking with its bets on Italian bonds even after yields on the securities climbed to the highest level in a decade yesterday.

Italian securities make up 13.7 percent of the $30.3 billion fund’s assets, compared with 7.2 percent in the benchmark it uses to gauge performance, the Citigroup World Government Bond Index, according to Masataka Horii, head of the Global Sovereign Open management team. The allocation has risen about 0.8 percent from a year ago, the Kokusai website shows.

Italy is in better economic and fiscal shape than Greece, Tokyo-based Horii wrote in an e-mail to Bloomberg News.

Greece is struggling to avoid default, leading to speculation Italy will also have difficulty paying its debts.

Kokusai Global Sovereign Open has handed investors a loss of 3.95 percent in the past three months, underperforming 83 percent of its competitors, according to data compiled by Bloomberg.

The price of the fund slumped 2.7 percent in the last two days, the biggest back-to-back decline in two months.

--With assistance from Ron Harui in Singapore. Editors: Nicholas Reynolds, Rocky Swift

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To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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