Fixed Income Boutique Emerging Markets Bonds

Vontobel Fund - Emerging Markets Blend

ISIN
LU1256229680
Valor
28772028

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, quasi-sovereign and corporate bonds of diverse qualities with different maturities in various currencies. The fund uses derivative financial instruments both for hedging purposes and to take outright market positions. Specifically, the fund can gain exposure to emerging market currencies independently of the currency of the underlying bonds.


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.

146.69
NAV
-6.65%
Performance YTD
As at Aug 10 2020

Why invest?

  • Bottom-up, value and contrarian focus.
  • Maximizes higher spread/yield for a slightly lower average rating than the benchmark through rich-cheap/lead-lag analysis.
  • Provides a solution to investors who desire to outsource their emerging market debt allocation.

"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

Our investment process

We take a deeply contrarian approach to emerging market debt, aiming to take advantage of the dislocation in valuations that often present themselves in this inefficient and news-flow driven asset class. We implement this through a five-step process, which combines top-down strategic themes and bottom-up analysis with a focus on maximizing credit remuneration.

While at times our drawdowns can be higher than the broader market, we have certain typical traits we adhere to, depending on what type of phase the market is experiencing:

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-blend-process_en

Investment opportunity – the best of emerging markets bonds

The emerging market bonds universe comprises of three asset classes:

  • Hard-currency debt—government bonds denominated in a major currency (e.g. USD, EUR, CHF)
  • Local-currency debt—government bonds denominated in the issuer country’s own currency (e.g. ARS, BRL, TRY)
  • Corporate bonds denominated in either hard- or local-currency

Historically, all three asset classes have delivered annual returns in excess of 6%, but they all perform differently depending on the prevailing economic environment, which is why the right blend of allocation is so important. We actively allocate between the three asset classes with the aim of obtaining an optimal balance in any market environment.

Therefore, the Emerging Markets Blend Fund provides a solution to investors who desire to outsource their emerging market debt allocation, offering you a combination of the best ideas and allocation. Now, within one tried-and-tested investment vehicle, you have access to the full universe of emerging market bonds, managed by an experienced team of experts.

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 Emerging Market Bonds team, comprising of highly experienced portfolio managers with strong track records. The team also has at its disposal the full capabilities within 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 SI
I USD 6.8% -11.1% 0.8% 39.6%
Index 2.2% -3.3% 3.1% 28.9%

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 NA 21.8% 0.4% 12.9% -9.6%
Index NA 6.3% -1.5% 10.7% 0.5%

Annual Performance

Risk Data

Portfolio Index
Yield to maturity 10.0% 4.5%
Modified duration 4.6 5.9
Volatility 17.8%
Average rating BB- BBB-
Number of positions 113.0 2'683
Active Share (country, issuer, ISIN) 50% / 87% / 98%
[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/Sergey Goncharov
Fund Domicile Luxembourg
Fund Currency USD
Share Class Currency USD
End of fiscal year 31 August
Index J.P. Morgan EM Equal Weight Total Return [BB: JEMBAGTR]
Share Class Launch date Aug 24 2015
Distribution type Accum
Swinging single pricing Yes
Fund Registrations CH, DE, ES, FI, FR, GB, IT, LU, NL, NO, SE, SG
Share Class Registrations CH, DE, ES, FI, FR, GB, IT, LU, NL, NO, SE, SG
Nav Information
Highest since launch 160.68
Lowest since launch 95.28
Fund volume in mln. USD 111.85
Share class volume in mln. USD 80.65
Fees And Expenses
Management fee 0.63%
TER 0.80% (Feb 28 2020)
Identifiers
ISIN LU1256229680
Valor 28772028
Bloomberg VEMBDXA LX
WKN A2DMCY
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
HI (hedged) CHF LU1896847891 Accum Institutional Oct 26 2018 0.63% 0.86% Feb 28 2020
HI (hedged) EUR LU1896847628 Accum Institutional Oct 26 2018 0.63% 0.86% Feb 28 2020
HS (hedged) CHF LU1896848279 Accum Institutional Nov 13 2018 0.00% 0.23% Feb 28 2020
I USD LU1256229680 Accum Institutional Aug 24 2015 0.63% 0.80% Feb 28 2020
PHS (partially hedged) CHF LU2001997159 Accum Institutional Jul 05 2019 0.00% 0.23% 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

Regional Exposure

Major bond positions

Bond Allocation
7.391% Republic of Angola Via Avenir II BV 2023 2.9%
3.624% Romanian Government International Bond 2030 2.6%
4.85% Czech Republic Government Bond 2057 2.6%
2.875% Mexican Bonos 2039 2.4%
8.25% Fideicomiso PA Pacifico Tres 2035 2.4%
12.5% Saderea DAC 2026 2.3%
13.5% East Renewable AB 2021 2.3%
2.5% Kingdom of Saudi Arabia 2027 2.3%
9.85% Swiss Insured Brazil Power Finance Sarl 2032 2.3%
12% Aragvi Finance International DAC 2024 2.2%
Document Date DE EN IT FR
Factsheets & Commentaries
Factsheet Jun 2020
Monthly Commentary Jul 2020
Brochures
Product Flyer Oct 2019
KIIDs
KIID Jun 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 emerging markets may be affected by political developments, currency fluctuations, illiquidity and volatility

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