Emerging market bonds had a volatile 2015 marked by concerns over the slowdown in China, geopolitical tensions in Russia, the Middle East and Latin America.
Persistently low commodity prices also had an effect on the fixed income market, with few bright spots to uncover for those invested in developing world debt.
Against this backdrop, Citywire Selector has taken a closer look at the top-performing managers focused on emerging market hard currency debt over the past 12 months.
There are currently 400 managers operating in the sector with a one-year track record in the Citywire database, with the average of these having lost 1.69% over the year to the end of December 2015
But who emerged on top? Let’s take a closer look at the top five outperformers in this tough sector.
5. Bob Maes, KBC Asset Management
Total return (December 2014-December 2015): 1.01%
Kicking off this line up is Bob Maes, who has 52 holdings in the KBC Bonds Emerging Markets fund, which he has managed since June 2011. In terms of positioning, the manager’s largest country bet is Turkey at 13.78%. The second largest is Russia at 12.89%. Maes devotes 82.92% of the fund to government bonds and Russian government bonds are also the largest holding at 9.11%.
4. Jennifer Gorgoll, Neuberger Berman
Total return (December 2014-December 2015): 1.49%
Jennifer Gorgoll has managed the Neuberger Berman Short Duration Emerging Market Debt fund since its launch in December 2013. Bart van der Made and Nish Popat are the co-managers on the fund but excluded from this analysis due to their roles on other funds in the sector.
China is the top country holding in the fund at 13.29% followed by Brazil at 9.68% and Turkey at 7.73%. Gorgoll has smaller holdings in Russia (7.04%) and Kazakhstan (6.33%). In terms of asset allocation, the managers prefer corporate bonds, which make up just over half of the fund at 50.36%. Quasi sovereign bonds are the next largest allocation at 24.31%.
3. Jürg Bollinger, Falcon Private Bank Ltd
Total return (December 2014-December 2015): 2.29%
Citywire + rated Jürg Bollinger has managed the $10.89 million Falcon Emerging Markets High Yield Bond fund since it was launched in January 2014.
He has 20 holdings in the fund and India is the largest country allocation at 28.51%. This is followed by China 9.3% and Indonesia at 9.17%, respectively. In terms of sectors, Bollinger holds 30.34% of the fund in banks and 14.04% in real estate. Cash is the second largest holding at 22.93%.
In his latest commentary, Bollinger said volatility would remain high in 2016, but the majority of the negative impact had been discounted in the market and is not far from reaching the bottom.
2. Claudia Calich, M&G Investments
Total return (December 2014-December 2015): 4.10%
Winning the silver medal in the category is Claudia Calich, who has 80 holdings in the M&G Emerging Markets Bond fund, which she has managed since December 2013.
The biggest allocation is to government bonds at 49.2% followed by high yield bonds, which make up 25.6%. The largest single allocation is an Indonesian bond, which makes up 3.1% of exposure. Calich favours bonds with 7-10 years maturity, which make up 32.8% of the fund. She holds 5.6% of the fund in cash.
1. Yerlan Syzdykov, Pioneer Investments
Total return (December 2014-December 2015): 9.83%
Citywire A-rated Yerlan Syzdykov comes top of this category by a comfortable margin. He has 371 holdings in the Pioneer Funds Emerging Markets Bond fund and holds 12.3% of the fund in cash.
In terms of asset allocation, Syzdykov devotes 14.4% of the fund to emerging government bonds, which is underweight against the benchmark allocation of 71.8%. He holds 34.4% in emerging non-financials, which is overweight against the benchmark of 13.7%.
On a country basis, the largest holding is the US at 11.6%, which is followed by China at 8.2%. He also has smaller holdings in Russia (5.9%), Brazil (4.5%) and Turkey (4%).