Vontobel Asset Management (AM) has launched an emerging markets (EM) blended fund which it says allows investors to outsource their allocation to the asset class.
The fund, which will be managed by head of EM debt Luc D’hooge (pictured) and portfolio managers Thierry Larose, Wouter van Overfelt and Sergey Goncharov, offers a combination of emerging hard currency, sovereign debt, local currency debt and corporate hard currency bonds.
Domiciled in Luxembourg, the fund has been launched and tested since August 2015, Vontobel said.
D’hooge said the fund provides access to the fund house’s best ideas in one product, enabling the client to delegate the decision of which asset class to invest and whether in hard or local currency.
“We have a strong track record in delivering attractive returns in emerging market fixed income, so this fund follows the same active, value and contrarian investment philosophy as the other strategies that we manage,” he added.
Over the three years, the institutional share class has returned 12.8% per annum on a net-of-fees basis, outperforming its reference index by more than 7% per annum. The index comprises 40% JPM EMBI Global Diversified, 40% JPM GBI EM Global Diversified and 20% JPM CEMBI Broad Diversified.
EMD requires a longer track record
However, Adrian Lowcock (pictured), head of personal investing at Willis Owen, said he would be nervous about the fund’s short-term track record despite its apparent strong performance since 2015.
“In a market such as EMD it doesn’t tell us much about how the strategy and managers are likely to perform across a broad range of markets, especially in bear markets as downside protection is essential when investing in this asset class,” Lowcock said.
“The performance figures do look impressive and this year the fund has fallen less than the index so it does look promising, we’d just need to see more of the same.”
Outsourcing EMD allocations
Simon Molica, fund manager of active portfolios at AJ Bell, said he likes blended emerging market debt funds and uses one in the managed portfolio service.
“A blended emerging market debt fund can be useful where you have a low overall exposure to emerging market debt and our preference is for the fund manager to be active in terms of allocating between hard and local currency.”
