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Strategies
The team provides:
- A broad spectrum of strategies ranging from investment grade to below investment grade
- An investable universe which includes sovereign bonds, corporate bonds, local currency bonds, distressed debt, convertible bonds and structured finance
Philosophy
The Emerging Markets Fixed Income team shares an investment philosophy that is anchored by four key principles:
- Emerging Market debt is a secular improving credit story
- Diversification across regions, countries, and sectors, as well as issuers is fundamental to credit risk management
- Avoiding potential problem credits and minimizing credit losses are as critical as selecting stable or improving credits
- Total returns will be derived from current income and capital gains
Process
The team’s investment process has been tested through numerous market crises. The team uses a five-step, bottom-up investment process designed to identify attractive investments through initial screening, credit research, establishing a link between credit fundamentals and market valuations , portfolio construction, in addition to an active management style. All sovereign and corporate credits are evaluated on a parallel track to identify credit strengths and weaknesses. The team performs scenario analysis for base-, best- and worst-case outcomes that form the basis of the performance benchmarks established for these credits. The team assigns probabilities and market valuations to derive targeted returns; the building blocks of its portfolio construction. Portfolio overlays, an active management style and a strong buy/sell discipline, complete the Team’s process.
Initial Screen
- Secular Outlook
- Geopolitical Stability
- Strategic Sectors and Country Resources
- Credit Fundamentals
Credit Research
- In-Depth Analysis
- Visits/Calls with Government Officials and Management
- Regulator Filings
- Company records
- Identifying Credit Strengths and Weaknesses
- Debt Indicators
- Operating performance
- Competitiveness and market share evaluation
- Standardized Reports with Performance Benchmarks
Established Link Fundamentals and Valuations
- Determine Target Returns
- Develop performance benchmark scenario analysis (Best, Worst & Base Case) performance and assign probabilities and valuation
Portfolio Construction
- Portfolio Construction Based on Characteristics and Liquidity constraints
Active Management Style
- Buy & Sell Discipline
- Buy Discipline criteria includes change In risk-adjusted return, credit quality Improvement and anticipating positive credit event
- Sell Discipline criteria includes expectation of deteriorating credit metrics, full valuation or change in risk-adjusted return
