Investment Strategies > Emerging Markets Debt Short Duration

Emerging Markets Debt Short Duration

An attractive way to take advantage of emerging market spreads while offering some protection from rising U.S. rates, by focusing on securities with short duration

Aims to provide a stable and attractive income by investing in a diversified selection of Emerging Market Hard Currency Sovereign and Corporate instruments
Average investment grade rating with a duration of 2 +/- 0.75 years
Early investors in EMD where senior portfolio managers have been working together since 2000

EMD Capabilities Brochure

Available as a UCITS Fund

Gorky Urquieta

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

Jennifer Gorgoll

Senior Portfolio Manager

Nish Popat

Senior Portfolio Manager

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 Fund may be unable to sell an investment readily at its fair market value. In extreme market conditions this can affect the Fund’s ability to meet redemption requests upon demand.
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 NAV of the fund may experience medium to high volatility due to lower liquidity and the availability of reliable information, as well as due to the fund'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 Fund.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
Counterparty Risk: The risk that a counterparty will not fulfil its payment obligation for a trade, contract or other transaction, on the due date.
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: Investors who subscribe in a currency other than the base currency of the Fund are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment. The past performance shown is based on the share class to which this factsheet relates. If the currency of this share class is different from your local currency, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency.

Strategy Description

We aim to access the potential of emerging markets by investing in a diversified selection of short duration hard currency sovereign and corporate credits, seeking to generate stable income and returns with limited volatility. The portfolio managers aim to avoid issuer defaults through thorough fundamental analysis.

We believe:

Rising interest rates are likely to remain a central theme in the markets for some time
There is investor appetite for exposure to sound emerging market issuers across sovereigns and corporates
The pick-up in yield of emerging market issuers over developed markets for equivalently rated issuers is attractive
Short Duration bonds can translate that yield into returns as they are less affected by the impact of rising rates
Short Duration will not be affected by emerging market currency volatility

Short Duration Investment Process

Our team follows a primarily bottom-up driven process incorporating multiple sources of alpha potential in the EM Sovereign and EM Corporate Hard Currency universe. Macro-economic analysis, alongside ESG criteria for country selection, are combined with bottom-up corporate credit analysis. Corporate names are subjected to stress test scenarios. Rating constraints, yield and duration criteria are used to narrow down the investment universe to create a model portfolio. Important feedback loops provide discipline on both performance and process.

Being early investors in emerging market debt, the team has spent nearly 20 years developing and refining this process. The top-down view determines the amount of risk taken within the portfolios, while the bottom-up research selects the underlying investments.

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.