"We aim to consistently deliver value to our clients by seeking to identify price discrepancies and invest with high conviction."
We take a five-step process that brings together top-down with bottom-up. We develop market thematic and country views and then dive into bottom-up credit selection to help improve yields and spread without penalizing the average rating of the portfolio.
By maximizing the payoff/credit risk ratio we aim to find recurring, low risk means of generating excess returns.
The emerging market bond asset class tends to be driven by short-term news flow, which often takes precedence over fundamentals, resulting in irrational investor behavior. This creates mispricing scenarios which can be exploited by active investors who are able to take a contrarian view when markets behave whimsically.
Despite its perception as an asset class with high volatility and greater risks, emerging market debt (in hard currencies) has historically delivered elevated long-term, risk-adjusted returns compared to other traditional asset classes. In comparison – while offering a greater return – emerging market debt volatility has been lower than US and global high-yield bonds. On the risk spectrum, emerging market hard-currency debt sits between traditional fixed-income segments and equities, making it a viable performance-generating addition to a well-diversified portfolio, in our view.
Segmented markets and risk aversion can offer high return, low volatility and uncorrelated opportunities. Our investment philosophy rests on two inefficiencies and sources of performance
The strategy is managed by Luc D’hooge who is assisted by the Vontobel Emerging Market Bonds team, comprising of experienced portfolio managers with strong track records. The team also has at its disposal the full capabilities of the Zurich based Fixed Income boutique. We believe this optimal team structure enables proactive early idea generation and implementation.
Source: Vontobel. The composite inception date is June 1, 2013. The composite‘s gross rates of return are presented before the deduction of investment management fees, other investment-related fees, and after the deduction of foreign withholding taxes, brokerage commissions and transaction costs. An investor’s actual return will be reduced by investment advisory fees. The composite‘s net rates of return are presented after the deduction of investment management fees, brokerage commissions, transaction costs, other investment-related fees and foreign withholding taxes. Results portrayed reflect the reinvestment of dividends and other earnings. The comparison to an index is provided for informational purposes only and should not be used as the basis for making an investment. There may be significant differences between the composite and the index, including but not limited to the risk profile, liquidity, volatility and asset composition. The Emerging Market Bond Index (EMBI) Global Diversified is a uniquely weighted US dollar-denominated emerging markets sovereign index. It has a distinct diversification scheme which constrains a country’s weight by first adjusting the face amount outstanding and then applying an additional layer of maximum weight cap of 10%. Index rebalancing occurs monthly on the last US business day of each month. Past performance not an indication of future results. Returns more than one year are annualized. Please refer to the Disclaimer tab for additional explanations regarding composite disclosure and other Important Information.
