Best in class
After filtering down the sector to isolate the funds that have performed best over all these metrics and periods, two stood out: Candriam Bonds Emerging Markets and M&G Emerging Markets Bond.
Both these funds sit in the top quartile for their 2013 and 2015 total returns, in addition to annualised volatility and maximum drawdown over three and five years.
As a result, they are also first-quartile for returns in 2016 to the time of writing (18 November) and over cumulative three- and five-year periods.The £1.3bn Candriam Bonds Emerging Markets Fund is run by a team of six managers, including head of emerging markets debt Diliana Deltcheva and senior fund managers Helena Clijsters and Isabelle Rome.
It invests in a diversified universe of emerging sovereign external debt. Around 75% of the portfolio is currently in sovereign bonds and 20% in quasi-sovereigns, with the residual 5% in corporate bonds, liquidities and cash.
The managers use a bottom-up approach that aims to exploit relative value opportunities in the market.
The portfolio’s largest geographic exposure at present is to Argentina, at 6.6% of assets, followed by Brazil, Mexico, Indonesia and Serbia.Candriam Bonds Emerging Markets held up well in the two down markets we looked at.
In 2015, it fell by 7.2% compared with a 9.4% drop by the sector, and in 2013 it made a 4.4% return when its average peer lost 5%.As a result, the fund was up 49.2% over three years and 63.6% over five years. In 2016 to 18 November it posted a 30.2% total return.
