Volatility from the Chinese stock market sell-off and the looming threat of a second taper tantrum in the wake of the Federal Reserve raising rates has many emerging market investors on edge.
With an increasing number of developing world companies entering the debt market to aid financing, there will be increased scrutiny on the strength of these securities in the coming months.
While turbulence is more commonplace among the emerging market corporates, which fund managers have ridden this rollercoaster with the most poise over the past year?
In this analysis, Citywire Global took a closer look at the Bonds – Emerging Market Global Corporates sector to uncover the three most improved managers among the 64 specialist investors with a one-year track record.
This involves looking at where they were in the rankings over the 12 months to the end of June 2014 and where they sat in the same peer group over the following 12 month period.
Over the past year, the average manager in the sector lost 5.32% in US dollar terms, while the most commonly-held benchmark, the BofA Merrill Lynch EM Corporate Plus TR, fell 1.21%.
3. Alain Defise, Pictet
- Ranking period one (June 2013-June 2014): 44/49
- Ranking period two (June 2014-June 2015): 18/64
Posting the third greatest improvement over this timeframe is Pictet’s Alain Defise, who has leapt 26 places up the sector rankings. Defise runs the CHF 1.6 billion (€1.1 billion) Pictet-Emerging Corporate Bonds fund, which was launched for him November 2012 shortly after joining from JP Morgan.
Recent moves have seen Defise, who is also head of the emerging market corporates team at the Swiss group, take an overweight position in Russia. Speaking in March, Defise said he adopted a 6% position in the country over the first quarter of 2015.
2. Sergio Trigo Paz, BlackRock
- Ranking period one (June 2013-June 2014): 45/49
- Ranking period two (June 2014-June 2015): 12/64
Showing an improvement of 33 ranking places over the past 12 months is BlackRock’s Sergio Trigo Paz, who is head of emerging markets fixed income at the US group. Trigo Paz has achieved the lift in performance on the BGF Emerging Markets Corporate Bond fund, which he has run since February 2013.
In this fund, which he co-runs with Jane Yu, Trigo Paz has focused on the Chinese market, which makes up 16% of the fund’s geographic exposure at present. The second largest allocation, as at the end of June, was in cash and derivatives which made up 9.5% of the fund.
1. Lisa Chua, HSBC GAM
- Ranking period one (June 2013-June 2014): 40/49
- Ranking period two (June 2014-June 2015): 4/64
Citywire + rated Lisa Chua has shown the strongest improvement in performance over the past 12 months and risen 36 ranking spots. Chua runs four funds on behalf of HSBC Gam, with her tenure on the HSBC GIF Global Emerging Markets Corporate Debt fund recognised here.
Currently, the largest allocations in the fund, which Chua co-runs with Guillermo Osses, are a 4.7% bet on Israel Electric Corporation, followed by a 4.6% allocation to South American telecoms company Comunicaciones Celulares.
Over the past year, the fund has returned 2.46% in US dollar terms, which is 7.7 percentage points above the average manager and also three percentage points over the index, the BofA Merrill Lynch EM Corporate Plus TR over the same period.