*Alpha refers to the excess return of an investment relative to a benchmark index and is a measure of performance.
The Emerging Markets Debt (EMD) strategy provides investors with a disciplined, risk-aware, and sustainability-driven approach to capturing opportunities in emerging markets. We aim to deliver superior risk-adjusted returns across diverse market conditions by integrating macro insights, rigorous credit analysis and ESG considerations.
Our approach
Emerging markets debt offers attractive yields and portfolio diversification but comes with geopolitical risks, policy shifts and structural inefficiencies. Our strategy manages these complexities through macro insights, bottom-up research and Environmental, Social and Governance (ESG) factors to ensure a strong risk-adjusted approach.
Our EMD strategies aim to capture market inefficiencies by integrating top-down beta positioning and bottom-up issuer selection.
Top-down positioning
We assess optimal risk allocation at every stage of the market cycle by analyzing financial conditions, inflation, and monetary policy. Our view of the risk environment also considers the US dollar, global and EM growth, and commodities to ensure alignment with market dynamics.
EMD hard currency debt: Focuses on identifying distressed opportunities while managing exposure to US rate cycles.
EMD local currency debt: Tactically positions to capture FX and duration gains with selective opportunities in undervalued currencies.
The top-down approach aims to position strategies to benefit from or withstand the anticipated stage of the business cycle and evolving market risk.
Bottom-up issuer selection
Our process balances bottom-up issuer analysis with top-down macro insights, ensuring a comprehensive evaluation of sovereign creditworthiness.
Sovereign and quasi-sovereign issuers: We assess economic stability, fiscal policies, governance structures and transition indicators through a quantitative Sovereign Ratings Model (SRM) to determine investment potential. Political risks and forward-looking macro-economic factors are analyzed through a fundamental assessment summarized in a proprietary country report.
Idiosyncratic opportunities: We actively seek relative value plays in markets with improving fundamentals such as distressed hard currency debt and undervalued local currency opportunities.
Local currency considerations: We assess relative drivers for domestic rates and currencies when accounting for local emerging markets debt with a scorecard framework.
Team
Our two EMD strategies are managed by three dedicated portfolio managers with distinct product and research expertise and a strong track record. The team brings over 15 years of experience on average, navigating multiple market cycles.
EMD sovereign portfolio managers collaborate with Global Macro strategists to analyze 90+ countries. They also work with the Global Credit, EM Fundamental Equity, and Sustainability teams to assess sovereign creditworthiness and long-term trends. All investment decisions remain independent.
Sub-strategies
EMD Hard Currency:
Identify and benefit from idiosyncratic or market driven shifts in sovereign creditworthiness.
EMD Local Currency:
Identify and benefit from EM or global monetary policy cycles and currency regimes.
Sustainability
We integrate sustainability (Country Sustainability Rating) and transition (SDG) metrics into our sovereign credit framework, recognizing governance, policy strength and climate transition as key drivers of financial and economic performance.
The aim of ESG integration is to minimize portfolio exposure to climate, social, and governance risks while capturing opportunities from positive developments.
Ingredients
High conviction
Concentrated portfolio to reflect our highest-conviction bonds
Agnostic
Flexible and opportunity-driven instead of bound to a benchmark
Stability
Managed by an experienced team with deep expertise
