Subject to regulatory approval, the fund will invest at least 70% of its total assets in emerging market debt securities across a range of countries and has the ability to invest in both investment grade and non-investment grade debt instruments.
Its manager will be Faisal Ali, who joined the firm in August 2011 and has over eight years’ experience in fixed income across Asia and emerging markets.
The move also follows the appointment of Sean Chang as head of Asian debt back in May, who is manager of the Asian Debt Fund and manages all other Asian debt investments across the company.
Faisal Ali said: "We believe emerging market debt has the potential to offer attractive risk-adjusted returns over the medium and long term. This asset class has shown impressive growth over the past decade and today can rightly be considered as an asset class within its own right.
"The rise in issuance over the last two years, as many local corporates take advantage of the current climate of low yields and a relatively weak US dollar, has not gone unnoticed by foreign investors."
"Though the Fund will be denominated in US Dollars, we will seek enhanced returns by using an innovative currency overlay, referencing the JP Morgan Emerging Markets Local Currency index to hedge the currency exposure back to EM local currencies. We believe most EM currencies should appreciate against developed market currencies over the long term."
Read our analysis on the increased activity in the EMD sector and find out about the biggest threat to the asset class over a medium-term timeframe.
Also look out for our view on emerging market debt in the July issue of the magazine, out in a couple of weeks.
