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Barings scraps emerging markets credit fund amid major redemptions

Barings scraps emerging markets credit fund amid major redemptions

Barings is set to close its emerging market corporate bond fund after receiving advance notice of several large redemptions that would render the Dublin-domiciled fund unworkable.

According to a shareholder note seen by Citywire Selector, the Baring Emerging Markets Corporate Debt fund is set to drop from $17.4 million to around $2 million once all announced redemptions are completed.

Barings said it therefore reviewed the fund, which was launched in 2012 and overseen by Nigel Sillis, and had opted against merging it with another fund as there was no appropriate candidate.

Therefore, it intends to formally liquidate the fund on 6 February due to the small size and the fact it is no longer deemed economically viable to run.

In a statement, the company said: ‘Where a fund has a small asset size, the costs and charges of running the fund become higher in percentage terms, which reduces the potential for growth. We consider that these costs and charges could be more than the potential returns of the fund.’

A spokesperson for Barings added: 'The EM credit fund is a legacy Baring Asset Management fund, and the determination to close the fund was made after a careful analysis of its economic viability.

'This in no way impacts the extensive emerging market debt investment platform (legacy Babson) capabilities, experience and performance that includes a 17-person team, over 50 global credit analysts, and deep expertise across the EM asset class.'

The spokesperson added Barings' EM debt team manages over $4.6 billion in EM assets, covering emerging market local debt, emerging market corporate debt and emerging market sovereign debt.

The fund was initially launched in June 2012 as part of plans by Barings to better cover emerging world corporate bonds. It was initially overseen by Faisal Ali before being handed to Sillis.

On a three-year total return basis, the Baring Emerging Markets Corporate Debt fund returned 3.1% in US dollar terms to the end of December 2016. This compares to a rise of 17.7% by the JP Morgan EMBI Global benchmark over the same period.

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