The Fund aims to achieve absolute returns within a tightly risk controlled environment. The fund utilises local and hard currencies and a fundamental, top-down, diversified approach to create a primarily relative value portfolio of global emerging market fixed income securities, currency and derivatives.
Latest Meeting Note
Conference Call 20 Apr 2021
The fund employs an unconstrained strategy investing in hard and local currency EM bonds and FX. The fund is run by lead managed Paul McNamara who is a 20+ veteran investing in this space. The high level aim of the strategy is to deliver... Read more
The fund employs an unconstrained strategy investing in hard and local currency EM bonds and FX. The fund is run by lead managed Paul McNamara who is a 20+ veteran investing in this space. The high level aim of the strategy is to deliver 70% of the upside to EM local while avoiding 80% of the downside. To achieve this the investment team build a portfolio of 3 - 5 top down investment themes which in turn determine country/region selection and the specific instruments expected to be the best expression of these themes. The typical portfolio will be exposed to 15-20 countries with around 40 positions in the book at any one time. The team's view is that a lot of the vol. in EM comes from global macro risks, and as such they actively hedge duration (using US of treasuries) as appropriate, and can hedge FX exposure through a diversified basket of EM currencies. A unique part of the idea generation process is the team's 'crisis cycle filter ' which is designed to highlight idiosyncratic features and turning points in economic cycles for certain countries. At the time of meeting the core themes behind the book were: Long rates in countries with steep yield curves and a sustainable fiscal outlook, Received rates/long bonds in Mexico, Russia,Indonesia, Peru and Colombia, Short rates in countries with low/negative real yields, Short US Treasury futures, bund futures and Long EM FX where balance of payments fundamentals appear most solid (amongst others). Over a now extended timeframe the strategy has delivered 3.3% annualised with a volatility of 4.4%.