China Bond - Total Return
The strategy seeks opportunities in the China onshore bond market by investing primarily in Renminbi denominated instruments from government and government-related issuers and combines top-down asset class analysis with bottom-up issuer and instrument analysis to seek out attractive relative value.
- Seeks to add value through interest rate positioning and credit exposures by investing in a diversified set of China onshore local bonds.
- Ability to invest opportunistically in RMB offshore instruments, as well as hard currency denominated debt from Chinese issuers.
- Rigorous research-driven with an ESG lens.
- Highly experienced global team—pioneers in emerging markets debt investing.
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.
Interest Rate Risk: The risk of interest rate movements affecting the value of fixed-rate bonds.
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.
Single Country Risk: Where a portfolio invests primarily in a single country, it may be subject to greater risk and above average market volatility than an investment in a broader range of securities covering multiple countries.
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.
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.
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.
China: Opening Doors for Global Bond Investors
Recent progress in the liberalisation and internationalisation of China’s rates, bonds and currency markets is opening up its capital markets- creating genuine opportunities for active managers to generate alpha.
Timeline: China’s Capital-Market Reforms
The team believes:
- The China onshore bond market is a rapidly developing and inefficient asset class and market mispricing allows managers to harness alpha through fundamental research.
- Active management is the best way for investors to harness the full potential of the China onshore bond market.
- Bottom-up and top-down expertise deepen understanding of performance drivers and improve decision-making quality.
A Disciplined Four Component Process
The team combines top-down analysis (40% contribution to expected alpha) with bottom-up analysis (60% contribution) of instrument and credit selection as well as curve positioning. Top-down analysis combines inputs from the wider team’s global EMD review with assessment of the China macro picture.
1 Expected Alpha contribution data is estimated and for illustrative purposes only. Forecasts may not materialise and actual data could differ. Past performance is not indicative of future results. As with any investment, there is the possibility of loss of the amount invested.
Experienced and Stable Team
The senior managers of Neuberger Berman’s Emerging Market Debt strategies began investing in the asset class in 1994 and together oversee one of the largest EMD teams in the industry. As a firm we are strategically committed to invest in our Chinese local market capabilities and one of the first international asset managers enabled to build from within.
China fixed income strategy is led by Peter Ru and supported by a dedicated team of local experts based in Shanghai and Singapore. Oversight of the strategy is provided by EMD co-heads Gorky Urquieta and Rob Drijkoningen.