Emerging Markets Debt Blend
Strategy combines the best ideas across hard currency, local currency and emerging market corporate debt strategies utilizing an opportunistic allocation process
- Seeks to maximize alpha drivers within sub-asset classes while opportunistically varying their exposure
- Top-down insights and bottom-up research amplify the set of alpha sources available to the portfolio while mitigating downside risks
- Highly experienced team—pioneers in emerging markets debt investing
Key Risks
Market Risk: The risk of a change in the value of a position as a result of underlying market factors, including among other things, the overall performance of companies and the market perception of the global economy.
Liquidity Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Emerging Markets Risk: Emerging markets are likely to bear higher risk due to a possible lack of adequate financial, legal, social, political and economic structures, protection and stability as well as uncertain tax positions which may lead to lower liquidity. The value of a portfolio may experience medium to high volatility due to lower liquidity and the availability of reliable information, as well as due to the strategy's investment policies or portfolio management techniques.
Credit Risk: The risk that bond issuers may fail to meet their interest repayments, or repay debt, resulting in temporary or permanent losses to the portfolio.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
Derivatives Risk: The strategy may use certain types of financial derivative instruments (including certain complex instruments). This may increase the portfolio’s leverage significantly which may cause large variations in the value of investments. Investors should note that the strategy may achieve its investment objective by investing principally in Financial Derivative Instruments (FDI). There are certain investment risks that apply in relation to the use of FDI.
Counterparty Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Operational Risk: The risk of direct or indirect loss resulting from inadequate or failed processes, people and systems including those relating to the safekeeping of assets or from external events.
Currency Risk: Investments in a currency other than the base currency of the portfolio are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment. If the currency of the portfolio is different from your local currency, then you should be aware that due to exchange rate fluctuations the performance may increase or decrease if converted into your local currency.
Overview
Investment Philosophy
Market mispricing allows managers to seek alpha opportunities through fundamental research.
- Emerging markets debt is a generally improving asset class that is less efficient than developed debt markets
- Active management is the best way for investors to access the full potential of the asset class
- Bottom-up and top down expertise increases understanding of performance drivers and improves decision making quality
- An emphasis on fundamental research is the best way to uncover the potential of emerging markets debt
Investment Process
Top-down and bottom-up approach with multiple alpha sources allocated opportunistically
Incorporates analysis of global economic drivers, individual country fundamentals, technical factors including supply and demand, and market pricing.
Includes country credit worthiness, analysis of individual credits, ESG considerations, assessment of currency drivers and analysis of local interest rate conditions.
Team combines top-down and bottom-up inputs with risk management to create a model portfolio.
- Ongoing process and performance evaluation.
- Portfolios are adjusted for client-specific guidelines.
Established Multi-Site Approach
Our presence across three emerging markets time zones allows us 24 hour-a-day market coverage, access to local in-depth knowledge and research and timely execution of investment decisions.
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Atlanta Senior Portfolio Manager Gorky Urquieta Jennifer Gorgoll |
The Haque |
Singapore Shanghai |
Integrating Environmental, Social and Governance in Emerging Markets Debt
Gorky Urquieta explains to Jonathan Bailey how the Emerging Markets Debt team integrates ESG criteria in their investment process across its platform as it provides a more comprehensive view of the issuer’s fundamentals to assess the risk premium.
Visit www.nb.com/esg for more.
Management
Gorky Urquieta
Rob Drijkoningen
Nish Popat
Jennifer Gorgoll
Bart van der Made
Raoul Luttik
Vera Kartseva, CFA
Related News & Insights
Re-Emerging Markets
- After two years of record-breaking outflows, is emerging markets debt due for a turnaround?
Last Mile for Tightening
- With tightening nearing an end but policy rates likely to remain elevated, we currently favor shorter durations, quality and attention to underwriting.
A Sharp Turn
- Risk/reward for many fixed income sectors has been shifting.
Reducing Altitude
- As inflation recedes, focus on quality and security selection.
Policy Stays in the Crosshairs
- Despite volatility, the basic storyline of inflation and the Federal Reserve should continue to drive market behavior.
Evergrande Heads for Default
- We believe systematic risk beyond the Chinese property market remains limited.
ESG for EMD: Toward Best Practice
- A serious approach to ESG in emerging markets is increasingly a proprietary approach.
Emerging Markets Debt: A Soft Patch for Hard Currency
- This year’s sell-off opens an opportunity to make strategic allocations at attractive valuations.