The Supranational Emerging Markets Local Currency Bond strategy is an emerging markets local currency (LC) debt strategy investing solely in supranational bonds with environmental and social impact, aiming to enhance risk-adjusted returns compared to traditional LC emerging markets debt (EMD) investing.
Supranational focus
Invests solely in supranational bonds aligned with UN Sustainable Development Goals, which may complement traditional LC EMD
Robust philosophy
Based on core beliefs of active management of currency risk, an unconstrained approach, and access to frontier markets
Experienced team
Dedicated nine-person EMD team with 19 years' average industry experience
EMD is a heterogeneous, semi-efficient market with multiple sources of mispricing.
The idea that foreign exchange (FX) and carry account for a significant portion of EM local currency volatility and return is the first pillar of the fund's approach.
Introducing additional emerging and frontier currencies can help reduce portfolio volatility is the second pillar.
Applying thoughtful allocation limits based on size and liquidity to help mitigate idiosyncratic risks is the final pillar.
An ESG exclusion screen and integrated fundamental analysis determines the investible universe.
Currency diversification through equal volatility weighted, risk-based allocation to all available countries is applied.
Macro-based reallocation, applying a systematic scorecard based on local macro factors, is implemented.
Active bond selection accounting for market technicalities, funding activities, maturities, and yield curve estimations, is employed.
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Risk Disclosures
Investing involves risk, including the possible loss of principal.
International investing (particularly in emerging markets) may be adversely affected by political instability; changes in currency exchange rates; inefficient markets and higher transaction costs; foreign economic conditions; the imposition of economic or trade sanctions; or inadequate or different regulatory and accounting standards. Investing in emerging markets involves greater risk than investing in more developed foreign markets because, among other things, emerging markets may have less stable political and economic environments, information about issuers may be less available or of a lesser quality, and securities markets may be smaller, less liquid, and subject to greater price volatility.
Fixed income securities can lose value, including the possible loss of principal. Fixed income securities are subject to credit risk and interest rate risk. Credit risk is the risk that an issuer of a fixed income security may be unable to make interest payments and/or repay principal in a timely manner. Interest rate risk is the risk that prices of bonds and other fixed income securities will increase as interest rates fall and decrease as interest rates rise. Fixed income securities with longer maturities or duration generally are more sensitive to interest rate changes.
Forward foreign currency contracts may substantially change a fund’s exposure to currency exchange rates and could result in losses to a fund if currencies do not perform as expected.
Nothing presented should be construed as a recommendation to purchase or sell any security or follow any investment technique or strategy.
All third-party marks cited are the property of their respective owners.
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Investing involves risk including the possible loss of principal. The investment capabilities described in this website involve risks due, among other things, to the nature of the underlying investments. All examples herein are for illustrative purposes only and there can be no assurance that any particular investment objective will be realized or any investment strategy seeking to achieve such objective will be successful. Past performance is not a reliable indication of future performance.
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