These are the sort of questions with which Neeraj Seth, who is head of Asian Credit at BlackRock – based in Singapore – thinks about a lot. He is not alone; at an investment seminar in Switzerland for journalists a few days ago and attended by this publication, much debate focused on when the extraordinary period of “quantitative easing” might come to an end.

The overall bond market asset class around the world has, apart from dramas such as in the bond bloodbath of 1994 or Russian default in 1998, been on a 30-year uptrend. That bull market may now be over. But even if the outlook from here is less rosy, there are plenty of opportunities for managers to find value, particularly when some emerging Asian debt markets are still relatively young and illiquid, Seth reckons.

Family offices and private banks are both “very active” investors in such bond funds, he said. “They continue to be an important part of our distribution network,” Seth told WealthBriefingAsia in an interview.

“Despite all this talk about the `Great Rotation’ out of bonds, we still see investors deploying capital into the credit markets of Asia,” he continued.

Seth likes to stress the benefit of working at the world’s biggest asset manager with a vast research engine; BlackRock oversaw a total of $3.792 trillion of assets under management as at the end of last year. That puts it comfortably ahead of the likes of State Street, Vanguard; Fidelity, Pimco (which specialises on fixed income), and JP Morgan Asset Management. Or put it this way: when BlackRock speaks, people listen.

But market firepower isn't enough. The sheer number of analysts means all that capital can be deployed to best effect. (In total, more than 10,000 people work at this US-headquartered behemoth.) “You need to get strong bottom-up research capability in your team,” he said. “We have a very established team here and an average experience of 11 years or more. That brings a lot of value to the table," Seth said.

Seth has the experience to see the bond market in historical perspective. Prior to joining his current employer in 2009, Seth was a senior vice president focusing on the Asia-Pacific market for R3 Capital Partners. He previously held a similar role with the global principal strategies team at Lehman Brothers. Previously, he was an associate partner with McKinsey & Company where he was in the leadership group for the technology and telecom practice in Southeast Asia.

At two funds he is involved with, the BlackRock Renminbi Bond Fund and the BGF Asian Tiger Bond Fund, performance has been mixed. At the former, the fund is up 13.7 per cent since inception (11 November 2011), beating the HSBC Offshore Renminbi Bond Index of 12.1 per cent. The other fund has chalked up a cumulative performance over five years of 49.1 per cent, against the JP Morgan Asia Credit Index of 53.6 per cent. (Source: BlackRock.)

Bond returns are still a lot more attractive in the Asian region – with some exceptions – than in much of the West, Seth said.

Asset allocations are suggestive of Seth's current thinking. The BlackRock Renminbi Bond Fund (AuM of $198 million), the largest sector holding is financials – at 27 per cent – while capital goods make up only 1.5 per cent of the total. As for the BGF Asian Tiger Fund, the country rankings are interesting: China makes up 21.7 per cent of the total portfolio ($1.052 billion), while it is 16 per cent on India and Singapore, just 3.2 per cent.

Within these broad categories, however, undiscovered gems lie around, Seth said.

“Asian credits do offer value; for historical reasons, Asia credit trades wider than the US and eurozone; there are pockets of value in Asia,” he said. “The key in the case of Asia is that they are relatively new markets with a lot of first-time issuers,” he said. “Overall, Asia has strong fundamentals but it does vary a lot also by country.”

Certain sectors give Seth some concern. He is mindful of a probable slowdown in the pace of GDP growth in China, and this is likely to affect sectors such as resources, to which BlackRock’s credit funds have low exposure and in some specific portfolios “zero exposure”, he said.

BlackRock also has low exposure to Chinese industrials, he said.