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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Leader in systematic equities across market cap weighted indices, smart beta and active quantitative strategies

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Emerging Markets Debt

Emerging Markets Debt

Investing in emerging markets debt offers the potential for attractive returns above alternate credit asset classes, especially in the prevailing low interest rate environment.

Jamie Grant

Head of Emerging Markets Debt and Asian Fixed Income

Access fast growing and diverse economies

Emerging or developing markets have more opportunity to grow their economies (coming from a lower base). There is potential for more upside for investors relative to developed markets. These countries – and their investment universes – continue to grow and evolve and this creates opportunities for excess returns and diversification.

Investing in emerging markets debt offers the potential for attractive returns above alternate credit asset classes, especially in the prevailing low interest rate environment.  

A truly flexible investment approach

Drivers of returns are constantly evolving; changeable dependent on varying market conditions. We aim to take advantage of arising opportunities by factoring in both top down (macro) and bottom up (country specific) factors into our investment process. We have proven that over the long term, this approach can deliver consistent risk adjusted performance throughout the market cycle.

A disciplined and repeatable research process

Forward looking and disciplined, our six-factor country research model is designed to prevent confirmation bias, prompting our experts to consider a broad set of potential credit drivers. An ESG assessment is vital to this process too and forms an integral part of our research.

Expert risk management

Risk management is key to our philosophy; it permeates every stage of our investment process. As part of this we are highly focused on liquidity, a factor that we believe renders us more nimble and responsive in changing markets.

We look further ahead for growth opportunities

Whether our clients choose from our range of actively managed strategies, or are looking for a more bespoke solution, what remains consistent is a proven investment process focussed on delivering risk adjusted returns. 

Why invest with us?

  • Diversified exposure to emerging markets: our strategy is to invest in sovereign, quasi sovereign and corporate bonds. Our investment process gives us flexibility to choose where opportunities are available in the market to generate returns for our clients.

  • Tailored portfolios: designed specifically for our clients, all of whom have different needs. We build collaborative relationship with our clients in order to achieve their investment objectives.

  • A proven track record: over the last decade, we have successfully navigated market cycles and idiosyncratic country turning points. Not only this, our active investment style and focus on risk management means we’ve been able to offer protection on the downside.

  • ESG integration: Specific country and corporate ESG considerations are an essential part of our in-house research .

Superior research helps us to take advantage of the opportunity

Emerging markets are often slow to price developments, both positive and negative. Through our superior research and systematic forward looking analysis, we believe that we can take advantage of this mispricing by identifying instances where consensus has become too bullish or too bearish. 

Case study

Why we are watching mispricing in Turkey

Turkey’s economic recovery was materially impacted by the pandemic. Once the fight against the COVID-19 pandemic gained some ground, Turkey started to ease the restrictions imposed since mid-March. Data released by the Ministry of Health towards the end of June was encouraging, with the number of new cases and daily casualties having peaked and with recoveries on an upward trend.  Success against the pandemic and early start of the normalization process proved to be positive as the budget deficit slowed.

Caution remains and fairly so, given the risk of a second wave of cases following the easing of restrictions.  Any economic recovery will likely have been hampered by the weakness of external demand until Turkey’s export markets, in particular Europe, recovered.  The future of tourism – a key industry for both the official and grey economy – depends on the global success against the pandemic and the easing in global travel.

We have taken advantage of opportunities in Turkey during periods of mispricing. The country’s bonds have been volatile and investment discipline has been necessary. Market technicals, valuations, a belief in the strength of Turkey’s institutions and geo-politics have been drivers for our recent positioning.

Meanwhile, credit fundamentals require a strong focus.  Access to USD liquidity and net foreign assets of the central bank are key considerations.  A sharp reversal in Turkey’s current account positon from a weaker currency is normally the path to growth for the country. However, the pandemic’s hit to global growth and fiscal shocks for Turkey mean we remain cautious until the budget deficit is controlled and the Turkish currency stabilises without on-going reduction of USD reserves.  

How can I use emerging markets debt in my portfolio?

Diverse sources of growth in a single asset class

There are plenty of idiosyncratic factors driving returns within emerging markets. Our clients have broad diversity across risk and reward opportunities coupled with the significant potential to benefit from economic growth differentials versus developed markets, and to gain access to a large range of expanding geographies, countries and sectors.

Yield

Offering our clients the potential for a yield greater than most fixed income asset classes.

Growth

Offering our clients diversification across the economic drivers of emerging markets, providing idiosyncratic opportunities.

Diversification

Giving our clients access to investment grade and high yield, hard currency and local currency as well as sovereign, quasi sovereign and corporate bonds.  A diverse asset class with differing risk return characteristics that can be tailored to specific objectives. 

Responsible Investment

Our corporate RI strategy is based upon three strategic pillars of quality, stewardship and engagement.

Our approach to investing is driven by a commitment to providing the best possible outcomes over the long term for our clients. The team considers ESG factors relative to their potential impact on financial performance. We believe that ESG issues have a significant bearing on risk.

Learn more about the Emerging Markets Debt team's approach to Responsible Investment

Team

Jamie Grant

Head of Emerging Markets and Asian Fixed Income

Mark Bodon

Senior Portfolio Manager

Bilal Khan

Portfolio Manager

Jan-Markus May

Portfolio Manager

The information contained within this document is generic in nature and does not contain or constitute investment or investment product advice.  The information has been obtained from sources that First Sentier Investors (“FSI”) believes to be reliable and accurate at the time of issue but no representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information.  Neither FSI, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from any use of this document.  

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