In this video, Hemant Baijal and Wim Vandenhoeck, portfolio managers on our Global Debt Team, converse on their approach to investing in emerging market local bonds, including the team’s investment philosophy, risk strategies and performance over various macro environments.
The market for locally denominated bonds in developing countries—known as emerging market local debt—has significantly matured and, in their opinion, features more attractive risk/reward characteristics than ever before.
To invest in these securities, our Global Debt Team has developed a proprietary framework for risk analysis and budgeting. Using this framework, they analyse the macro landscape globally to determine the nature, size and allocation of our risk exposure. Additionally, they actively manage interest rate, currency and credit exposures to pursue returns.
In their view, emerging market local debt could serve as a diversifying and return-enhancing complement to a global fixed income portfolio. They believe that the appropriate level of exposure to maintain this asset class varies over time and depends on the market environment.