The Strategy's objective is to make a return in excess of a blended benchmark comprising 50% JP Morgan Emerging Market Bond Index Global Diversified and 50% JP Morgan Global Bond Index – Emerging Market Broad Diversified, over the credit cycle (gross of fees), primarily through country selection.
- We predominantly hold hard and local currency sovereign and quasi-sovereign debt.
- We also seek to hold a selection of 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.
- 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, local currency and local interest rates.
- Particular emphasis is given to avoiding deteriorating credits and one-off currency devaluations
- The wider investment universe creates additional sources of alpha than in a single sovereign strategy in addition to the hard versus local currency asset allocation decision
- The Strategy has a bottom-up portfolio construction process that implements fundamental country views based on our conviction in each standalone asset type opportunity
- 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 Strategy′s interest rate positions are primarily based on the fundamentals and valuation of each local rate market (e.g., inflation trends and policy stance of central bank)
- The Strategy′s FX positions are more strategic than tactical with a consideration of both technicals and fundamentals for each currency
- The portfolio′s aggregate exposure to headline risk factors (e.g., US Treasury duration, EUR/USD, oil beta) is managed through liquid instruments and derivatives
- BlueBay believes that taking into account environmental, social and governance (ESG) factors is an important aspect of the investment process. As such, ESG integration – the systematic review of material ESG investment risks – is applied across all our funds. We have been a UN-PRI signatory since 2013
Emerging market debt expertise
- The firm has a strong and proven emerging market debt capability dating back to the firm’s inception.
- We have built a team and a business which today manages in excess of USD$10bn and has established itself as one of the most respected asset managers in this space.
- Our expertise 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.
- BlueBay has always endeavoured to be at the forefront of development and innovation in the market as the asset class has evolved and has consistently been one of the first movers in new asset classes, whether in local currency debt, corporate debt, or EM alternatives.
- 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 generate strong risk-adjusted returns.
- Our long track record in multiple products demonstrates an ability and keen willingness to generate returns through superior and meticulous research and strong risk management with a focus on capital preservation.