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An emerging markets bond fund that has the flexibility to invest across the emerging debt market universe, with the ability to hold sovereign and corporate debt, in both hard and local currencies. The approach combines macro views with detailed credit analysis to identify the best ideas from across the asset class. Within its sector, the fund features in our 'Emerging Market Debt, Flexible' sector.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 4. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 4 means the fund’s historic volatility is between 5% and 10%.
The fund’s observed five- year standard deviation is in keeping with mainstream emerging market bond indices. This is testament to the manager’s strong valuation discipline combined with her focus on risk. Different share classes could have differing SRRI scores.
The fund is managed by Claudia Calich, with assistance from deputy manager, Charles De Quinsonas. Ms Calich has over twenty years of experience in emerging markets, having previously managed emerging market debt portfolios at Invesco in New York. Mr Quinsonas specialises in the analysis of emerging market corporate bonds. They benefit from the broad capabilities of M&G's Retail Fixed Interest team.
The manager believes she can maximise returns in emerging market debt by choosing the optimal mix between government and corporate issues in local and hard currency, as well as by careful country and security selection. She operates a flexible, total return approach that blends high conviction macro views with fundamental credit analysis, with the aim of identifying the best ideas from across the asset class.
The fund is not constrained by an index. However, as a starting point, the manager considers a neutral position to be one third in emerging market hard currency sovereign bonds, one third in local currency sovereign bonds and one third in dollar-denominated corporate bonds. From a currency perspective, a US dollar exposure of two-thirds of the portfolio is considered neutral. The fund tends to be relatively concentrated, with around 70-80 holdings, and exposures to individual countries are limited to between 10% and 25%, depending on its credit rating. Duration can range from 0 to 10 years. The manager has the scope to manage currencies actively. She uses a range of instruments in managing the fund, including direct bond holdings, credit default swaps (CDSs), futures and forwards. Independent risk teams and internal risk analysts monitor the fund against portfolio guidelines and limits.
The process is framed by the manager's assessment of the global macro-economic environment. This influences both the overall level of risk in the fund and the asset allocation.
Having formed these broad views, the manager undertakes analysis of individual countries. She assesses each country's fiscal and monetary policies and trends, political stability and economic outlook. In particular, she seeks to identify turning points, both positive and negative, that could trigger a change in the country's prospects. For each country, the manager employs a disciplined scoring method to capture her appraisal, which includes bull and bear scenarios. If a country is attractive from a top-down perspective, she undertakes a relative valuation assessment to help identify the most attractive investment opportunities. She will only hold individual corporate bonds in countries where she has a positive view.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above, as well as a link to the ASSET MANAGER FACTSHEET.
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