The market share from property bonds has fallen as a result of the country's property debt crisis, which used to be a key performance driver for junk bond funds.
Investment analysts tell CNBC that investors of high-yield bonds in Asia need to prepare for lower returns.
Portfolio managers and analysts who spoke to CNBC said that the debt crisis drove down the prices of property bonds in some Asia high-yield funds.
The majority of the high-yield universe is comprised of property bonds. Their share in the Asian junk bond market went down as their market value went down. Fund managers used other kinds of bonds to make up for the losses and investors in high-yield funds may not be able to find the same returns again.
Junk bonds, also known as high-yield bonds, are non-investment grade debt securities that carry bigger default risks and therefore have higher interest rates.
The share of China real estate has fallen considerably.
A combination of lower bond supply and falling bonds out of the index is the reason for the drop.
China real estate's importance in the Asian credit universe is decreasing.
China Evergrande was the world's most indebted property developer. Firms in China's property sector were affected by the crisis. Some developers missed interest payments while others didn't pay their debts at all.
Fund managers are looking to other areas to fill the gap left by China real estate, but analysts don't think they will offer better yields than their predecessors.
Shifting away from the high yielding China property space is one way to reduce relative yield in the portfolio.
She told CNBC that managers need to think about what yield they can achieve with a default.
With lower supply from China, interest in Indonesian high-yield has grown since the China property crisis.
It used to be that funds that were more overweight on China's real estate bonds beat those that were less overweight.
He said that it is unlikely that this will be the case going forwards, at least for the short-term.
China's massive real estate sector has come under pressure in the past year due to Beijing cracking down on developers' high reliance on debt and a surge in housing prices
As fund managers for Asia's high-yield bonds move their money out of China property, the renewable energy and metals sectors in India are also included.
Ge said that some are seeing potential upside in real estate in Indonesia, which they expect to benefit from low mortgage rates and extended governmentStimulus.
Since the China property crisis, interest in Indonesian high-yield has grown.
According to a recent Moody's report, high-yield portfolios in Southeast Asia are likely to be less risky for investors due to their relatively stable credit quality.
"Portfolio managers will have to rely on their bottom-up credit selection capabilities more than they have in the past to select the winners/survivors." The approach that focuses on analyzing individual stocks is called bottom-up investing.
It's a good idea to go into other sectors as it helps to Diversify the portfolios of investors, but it comes with other risks.
China's property debt crisis has caused investor confidence in the ability of its developers to repay their debt to plummet.
Moody's said in a June report that real estate firms there have been facing challenges in attracting overseas financing.
Annalisa Dichiara, a senior vice president at Moody's, said that the US dollar bond market is mostly shut to Asian companies.
More China real estate developers are expected to default on debt this year, as half of the 50 names that the agency covers are under review for downgrade.
China's real estate market is still subdued according to data released in June.
Despite growth in fixed asset investment, real estate investment fell in the first five months of the year.
Property prices across 70 Chinese cities were little changed in May.
Evelyn Cheng worked for CNBC.
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