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Emerging Markets Fixed Income

Strategies
The Emerging Markets Fixed Income team has been investing in the asset class since 1994. The team successfully provided a broad spectrum of customized strategies constructed from the Investment Grade to Below-Investment Grade offerings of the asset class. The EM investable universe includes Sovereign bonds, Corporate bonds, Local Currency bonds, Distressed debt, Convertible bonds, and Structured Finance. The team’s bottom-up research process emphasizes global and multi-sector diversification to generate attractive risk-adjusted returns from income and capital appreciation.

Philosophy
The Emerging Markets Fixed Income team shares an investment philosophy that is anchored by four key principles:

  • Emerging Market debt is a secular improving credit story
  • Diversification across regions, countries, and sectors, as well as issuers is fundamental to credit risk management
  • Avoiding potential problem credits and minimizing credit losses are as critical as selecting stable or improving credits
  • Total returns will be derived from current income and capital gains

Process
The team’s investment process has been tested through numerous market crises. The team uses a five-step, bottom-up investment process designed to identify attractive investments through initial screening, credit research, establishing a link between credit fundamentals and market valuations , portfolio construction, in addition to an active management style. All sovereign and corporate credits are evaluated on a parallel track to identify credit strengths and weaknesses. The team performs scenario analysis for base-, best- and worst-case outcomes that form the basis of the performance benchmarks established for these credits. The team assigns probabilities and market valuations to derive targeted returns; the building blocks of its portfolio construction. Portfolio overlays, an active management style and a strong buy/sell discipline, complete the Team’s process.

Process

     
  • Secular Outlook
  • Geopolitical
    Stability
  • Strategic Sectors
    and Country
    Resources
  • Credit
    Fundamentals
  • In-Depth
    Analysis
  • Visits/Calls
    with
    Government
    Officials and
    Management
  • Regulator
    Filings
  • Company
    records
  • Identifying
    Credit
    Strengths and
    Weaknesses
  • Debt Indicators
  • Operating performance
  • Competitiveness
    and market share
    evaluation
  • Standardized
    Reports with
    Performance Benchmarks
  • Determine
    Target
    Returns
  • Develop performance benchmark scenario
    analysis (Best, Worst & Base Case) performance
    and assign
    probabilities
    and valuation
  • Portfolio Construction Based on Characteristics and Liquidity constraints
  • Buy & Sell Discipline
  • Buy Discipline criteria includes change In risk-adjusted return,
    credit quality Improvement
    and anticipating positive credit event
  • Sell Discipline criteria includes expectation of deteriorating
    credit metrics,
    full valuation or change in risk-adjusted return