Fixed Income Boutique Emerging Markets Bonds

Vontobel Fund - Emerging Markets Debt

ISIN
LU0926439729
Valor
21343507

Fund strategy

Investment objective

This bond fund aims to generate the best possible investment returns over a full economic cycle, while respecting risk diversification.


Key features

The fund invests across emerging markets mainly in government and quasi-sovereign bonds of diverse qualities with different maturities in various hard currencies. In addition, the fund may have limited exposures to emerging market corporate bonds as well as emerging market currencies. The fund uses derivative financial instruments, primarily for hedging purposes.


Approach

The compact and agile investment team of experienced emerging market specialists focuses on spread optimization for a given level of risk. Based on in-depth research and using a proprietary valuation model, the portfolio managers continuously compare the levels of remuneration potential available across issuer qualities, countries, interest rates, currencies and maturities within the investment universe to identify the most rewarding opportunities, which may be contrarian to mainstream views. To seize them, the team flexibly adapts the portfolio while keeping credit, interest rate and currency risks in check.

138.78
NAV
-2.79%
Performance YTD
4 stars
As at Aug 10 2020 As of Jun 30 2020

Why invest?

  • A bottom-up driven approach with rigorous proprietary rich-cheap analysis to optimize the credit and security selection, enabling us to extract higher performance for a given credit risk.
  • Highly experienced and high conviction portfolio managers, backed by a compact, multi-disciplinary, and independent Fixed Income boutique.
  • A contrarian and value-investing style in order to capitalize on irrational, herd-like investor behavior, while monitoring liquidity and diversification of our portfolio exposure.

"We have consistently delivered value to our clients by identifying price discrepancies and investing with high conviction."

Luc D’hooge, Head of Emerging Market Bonds

Investment process

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 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.

Typical behavior during consolidating markets
  • During significant widening of spreads, mispricings present themselves and we tend to reinforce our exposure as bonds are easier to buy.
  • We accept that reinforcing right at the bottom is almost impossible.
  • We may underperform in periods of a deep correction as we add risk, but when markets stabilize and rebound, the portfolio performance tends to accelerate.
Typical behavior during rallying markets
  • Invariably, mispricings continue to exist across regions, countries, curves, currencies, etc.
  • We tend to be overweight the market to capture these mispricings
Typical behavior in overheating markets
  • When we sense that the “dash for trash” is exaggerated, and investors are gobbling up anything they can get their hands on, we tend to take profits, reduce exposure to spread duration, increase average rating, etc.
  • We find at these times it is easier to sell bonds
infograph-product-em-debt_en

Investment opportunity – one of the best long-term risk-return ratios

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 the best 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.

Investment philosophy – inefficiencies lead to opportunities

Segmented markets and risk aversion offer high return, low volatility and decorrelated opportunities. Our investment philosophy rests on two inefficiencies and sources of performance

infograph-boutique-fixed-income-em-inefficiencies_en

Investment team

The fund is managed by the Head of Emerging Markets Bonds, Luc D’hooge who is assisted by the Vontobel Asset Management Emerging Market Bonds team, comprising of highly experienced portfolio managers with strong track records. The team also has at its disposal the full capabilities of the Zurich based Fixed Income boutique. This optimal team structure enables proactive early idea generation and implementation.

All data is as at Jun 30 2020 unless otherwise indicated.

Daily Performance

Periodic Performance

1M YTD 3Y 5Y SI
I USD 5.5% -6.3% 1.9% 5.4% 33.7%
Index 3.5% -2.8% 3.6% 5.3% 34.1%

Rolling Performance

Jul 01 2015 - Jun 30 2016 Jul 01 2016 - Jun 30 2017 Jul 01 2017 - Jun 30 2018 Jul 01 2018 - Jun 30 2019 Jul 01 2019 - Jun 30 2020
I USD 8.0% 13.6% -1.4% 11.6% -3.7%
Index 9.8% 6.0% -1.6% 12.4% 0.5%

Annual Performance

Risk Data

Portfolio Index
Yield to maturity 6.6% 4.3%
Yield to maturity after hedge 6.6% 4.3%
Modified duration 6.5 7.6
Volatility 15.4%
Average rating BB BB+
Number of positions 239.0 821.0
Active Share (country, issuer, ISIN) 38% / 64% / 89%
[3 years annualized]
Past performance is not a reliable indicator of current or future performance. Performance data does not take into account any commissions and costs charged when shares of the fund are issued and redeemed, if applicable. The return of the fund may go down as well as up due to changes in rates of exchange between currencies. The value of the money invested in the fund can increase or decrease and there is no guarantee that all or part of your invested capital can be redeemed.

All data is as at Aug 10 2020 unless otherwise indicated.

Fund data
Portfolio Manager Luc D'hooge
Fund Domicile Luxembourg
Fund Currency USD
Share Class Currency USD
End of fiscal year 31 August
Index J.P. Morgan EMBI Global Diversified
Share Class Launch date May 15 2013
Distribution type Accum
Swinging single pricing Yes
Fund Registrations AT, CH, DE, ES, FI, FR, GB, IT, LI, LU, NL, NO, PT, SE, SG
Share Class Registrations AT, CH, DE, ES, FI, FR, GB, IT, LI, LU, NL, NO, SE, SG
Nav Information
Highest since launch 146.88
Lowest since launch 89.62
Fund volume in mln. USD 4,629.38
Share class volume in mln. USD 1,476.00
Fees And Expenses
Management fee 0.55%
TER 0.77% (Feb 28 2020)
Identifiers
ISIN LU0926439729
Valor 21343507
Bloomberg VEMIUSD LX
WKN A1T96G
Parties
Depository RBC Investor Services Bank S.A.
Management Company Vontobel Asset Management S.A.
Swiss Paying Agent Bank Vontobel AG
Swiss Representative Vontobel Fonds Services AG

Available Share Classes

Share class Currency ISIN Distrib. Type Launch date Management fee TER TER Date
AH (hedged) EUR LU1482064224 Dist Retail Sep 08 2016 1.10% 1.42% Feb 28 2020
AHI (hedged) CHF LU1572142336 Dist Institutional Mar 10 2017 0.55% 0.83% Feb 28 2020
AHN (hedged) EUR LU1684196279 Dist Retail Oct 05 2017 0.55% 0.87% Feb 28 2020
AI EUR LU1086766554 Dist Institutional Jul 09 2014 0.55% 0.77% Feb 28 2020
B USD LU0926439562 Accum Retail May 15 2013 1.10% 1.36% Feb 28 2020
H (hedged) EUR LU0926439992 Accum Retail May 15 2013 1.10% 1.42% Feb 28 2020
H (hedged) CHF LU0926440065 Accum Retail May 15 2013 1.10% 1.42% Feb 28 2020
HI (hedged) CHF LU0926440495 Accum Institutional May 15 2013 0.55% 0.83% Feb 28 2020
HI (hedged) GBP LU1700373241 Accum Institutional Oct 27 2017 0.55% 0.83% Feb 28 2020
HI (hedged) EUR LU0926440222 Accum Institutional May 15 2013 0.55% 0.83% Feb 28 2020
HN (hedged) CHF LU1683481938 Accum Retail Oct 03 2017 0.55% 0.87% Feb 28 2020
HN (hedged) EUR LU1683488438 Accum Retail Oct 12 2017 0.55% 0.87% Feb 28 2020
HS (hedged) CHF LU1627767111 Accum Institutional Jun 21 2017 0.00% 0.21% Feb 28 2020
I USD LU0926439729 Accum Institutional May 15 2013 0.55% 0.77% Feb 28 2020
N USD LU0926439646 Accum Retail May 15 2013 0.55% 0.81% Feb 28 2020
S USD LU1171709691 Accum Institutional Jan 20 2015 0.00% 0.15% Feb 28 2020
Click here to see an overview of our shareclass naming convention.

* TER includes performance fee where applicable

All data is as at Jun 30 2020 unless otherwise indicated.

Rating Structure

Document Date DE EN ES FR IT
Factsheets & Commentaries
Factsheet Jul 2020
Monthly Commentary Jul 2020
Brochures
Product Flyer Oct 2019
KIIDs
KIID Jul 2020
Legal Documents
Articles of Association Apr 2016
Notification to Investors Apr 2020
Sales Prospectus Dec 2019
Financial Reports
Annual Report Aug 2019
Dividend Payout Jan 2019
Semi-Annual Report Feb 2020
Dealing Information
Holiday Calendar 2020 Jan 2020
List of Active Retail Share Classes Dec 2018
Policies
Sanctioned Countries Sep 2016
Shareclass Naming Convention Nov 2019
  • Limited participation in the potential of single securities

  • Success of single security analysis and active management cannot be guaranteed

  • It cannot be guaranteed that the investor will recover the capital invested

  • Derivatives entail risks relating to liquidity, leverage and credit fluctuations, illiquidity and volatility

  • Interest rates may vary, bonds suffer price declines on rising interest rates

  • Investments in foreign currencies are subject to currency fluctuations

  • Investments in emerging markets may be affected by political developments, currency fluctuations, illiquidity and volatility

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