The emerging markets have proven a hot bed of investor interest amid the hunt for yield.
Inflows into local currency debt in particular have picked up as returns proved appetising, but who is staying ahead of the pack?
In this analysis, Citywire Selector focuses on the Emerging Market Debt – Local Currency managers topping the sector on a five-year total return basis.
We take a closer look at their current investment thinking to see how they have forged ahead amid rising investor interest and the ability to invest across a range of differing and varied markets.
*Data covers the period August 2012-August 2017.
2. Thomas Delabre, H2O AM
Fund: H2O MultiEmerging Debt
Performance: Five-year total return of 11.62% with a Manager Ratio of 0.26.
Experience: Delabre started his career in 2000 as a junior economist at the French Embassy in India. He moved to Credit Agricole in 2002, then known as Credit Lyonnais, where he worked as a risk analyst covering Latin America. He joined Amundi Asset Management in 2005 as an emerging markets strategist and was appointed as a manager of an emerging market fund in 2009. He joined H2O in October 2014.
Citywire rating: Delabre achieved his first Citywire rating in August 2015 and has held onto it ever since. He started out with a Citywire + rating and was rated AA between November 2016 and April 2017. He was AAA-rated in May 2017 for one month and also in July before dropping down to his current level.
Investment style: Delabre splits the fund between sovereign debt, credit and currencies. There are no constraints in terms of ratings, maturity, country or sector. Mexican government bonds are the largest individual holding in the fund at 15.49%. This is followed by South African government debt at 12.13%.
1. Michael Hasenstab & Laura Burakreis, Franklin Templeton
Performance: Five-year total return of 18.04% with a Manager Ratio of 0.41.
Experience: Hasenstab joined Franklin Templeton Investments in July 1995 and started managing his first fund in 2001. He is currently a named manager across 24 funds. Burakreis joined the group in 2006 and has been running this fund since January 2009. She also co-manages three other emerging market bond funds with Hasenstab at the company.
Citywire rating: Hasenstab is not currently rated although he has earned two extensive periods of ratings in the past. The first was between December 2011 and February 2013, while the second was between October 2014 and December 2015. He has never held a AAA rating. Burakreis is currently + rated and was AAA-rated between December 2013 and February 2014.
Investment style: The managers have 183 holdings in the portfolio with an average duration of 2.07 years. Brazil is the largest country allocation, which makes up 14.25% of the fund and the managers devote 11.62% to India. In terms of currencies, the US dollar makes up over a third (34.31%) of the fund and the Mexican peso accounts for 19.14%.
This article originally appeared in the September edition of Citywire Selector magazine.