Emerging Markets Local Currency Total Return Strategy

Catering to investors who seek a smoother return path than the main EM local currency debt benchmarks.

Offering investors quality access to the local currency EM debt asset class.

The Strategy aims to outperform the EM local currency market index by targeting opportunities with sustainable economic prospects.

Key Features

We explore the opportunities across the entire investment universe, without being constrained by an index.
We look for markets that are structurally stronger than their peers and for those that are becoming more resilient.
It is our investment conviction in individual markets and their risk characteristics – rather than their weight in the benchmark – that determine position sizes, as we believe these are most relevant to investors.
Our aim is to deliver the upside return potential of the EM local currency debt market and cushion against market falls.

Bonds from economies with improving structural strength are often under-represented in benchmark-relative portfolios. It’s precisely these that we want in the portfolio.

Antoon de Klerk

André Roux

Strategy highlights

01

Bottom-up selection aims to identify the strongest economies in the emerging market local currency universe and those with improving long-term structural dynamics.

02

Our risk-budgeting approach tilts the portfolio to lower volatility markets with the aim of delivering superior risk-adjusted returns than the market index.

03

The top-down part of our process allows us to dynamically reduce the strategy’s overall market exposure with the aim of protecting on the downside.

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General risks:

Past performance is not a reliable indicator of future results and performance targets may not be achieved; losses may be made.

Specific Risks:

Currency exchange: Changes in the relative values of different currencies may adversely affect the value of investments and any related income.
Default: There is a risk that the issuers of fixed income investments (e.g. bonds) may not be able to meet interest payments nor repay the money they have borrowed. The worse the credit quality of the issuer, the greater the risk of default and therefore investment loss.
Derivatives: The use of derivatives may increase overall risk by magnifying the effect of both gains and losses leading to large changes in value and potentially large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss.
Interest rate: The value of fixed income investments (e.g. bonds) tends to decrease when interest rates rise.
Emerging market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.

NinetyOne

Location:Australia

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Call client team +61 2 9160 8400