Institutional Strategy > Fixed Income > Emerging Markets Debt Hard Currency

Emerging Markets Debt Hard Currency

Invests across the most established emerging markets debt asset class, made up of sovereign and corporate bonds issued in major currencies

Investment approach utilizes multiple alpha sources by combining top-down asset class analysis with a bottom-up country and issuer review to seek out attractive relative value across the emerging debt market
Attractive yields from emerging sovereign and quasi-sovereign credit—with risk budget for corporate opportunities
Early investors in EMD; team has been investing in hard currency debt since 1994

EMD Capabilities Brochure

Available as a UCITS Fund

Gorky Urquieta

Senior Portfolio Manager and Global Co-Head of Emerging Markets Debt

Rob Drijkoningen

Senior Portfolio Manager and Global Co-Head of Emerging Markets Debt Head of Fixed Income Europe

Bart van der Made

Senior Portfolio Manager

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 produce 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

1. Top-Down Assessment of Global Market Conditions

Incorporates analysis of global economic drivers, individual country fundamentals, technical factors including supply and demand, and market pricing.

2. Bottom-Up Country /Issuer Credit/ Local Rates and EMFX Review

Includes country credit worthiness, fundamental analysis, ESG scores and assessment of individual instruments.

3. Strategy Setting, Risk Management and Portfolio Construction

Team combines top-down and bottom-up inputs with risk management to create a model portfolio.

4. Portfolio Customization Process and Performance Evaluation

Ongoing process and performance evaluation.
Portfolios are adjusted for client-specific guidelines.

Proven 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.