The Strategy's objective is to achieve returns in excess of the JP Morgan Emerging Market Bond Index Global Diversified, over the credit cycle (gross of fees), primarily through country selection.
Strategy overview
- We predominantly hold hard currency bonds from sovereign and quasi-sovereign issuers.
- At times, we may hold a few high-conviction, liquid corporates if we see an opportunity for attractive returns.
- Our focus is on capital preservation and we gain insight from our fundamental research.
Our approach
Investment strategy
- The strategy seeks to generate excess returns via superior country and issue selection through an in-depth country and security selection process focusing on value in external credit spreads
- The strategy invests in hard currency, predominantly USD-denominated, sovereign credit across a broad range of emerging market countries; from the more frontier economies such as Ethiopia, through to the more developed economies like Mexico
- The strategy has a bottom-up portfolio construction process that implements fundamental country views based on our conviction in expected risk-adjusted spread forecasts
- Our sovereign credit research process uses proprietary models to quantify each country′s willingness and ability to pay its debt and measures how that changes over time and across peers
- The portfolio′s aggregate exposure to headline risk factors (e.g., US Treasury duration) is managed through liquid instruments and derivatives
- The Strategy can also have a 20% allocation to hard currency-denominated EM corporate bonds
- The BlueBay Fixed Income Team believes that taking into account environmental, social and governance (ESG) factors is an important aspect of the investment process.
Emerging market debt experience
- Our experience covers the full spectrum of emerging market sub-asset classes – from traditional benchmarked single sector strategies to unconstrained strategies and hedge funds. Our diversified investor base entrusts us with managing assets incorporating standardised as well as customised, client-specific requirements.
- We have always endeavored to be at the forefront of development and innovation in the market as the asset class has evolved. Our AUM has grown substantially as the asset class matured - a strong reflection of our capability and our offerings over the past two decades
- We are an active manager, and our philosophy is rooted in the belief that EM remains an inherently inefficient asset class – there are price discrepancies which can be exploited in meaningful size to pursue strong risk-adjusted returns.
- Our experience in multiple products demonstrates an ability and keen willingness to seek returns through superior and meticulous research and strong risk management with a focus on capital preservation.