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BI SICAV - Emerging Markets Corporate Debt I is best in class in Europe

01.15.2016

Yielding an average return of 1.61% p.a. in the 3-years period ending at 31 December 2015, BI SICAV - Emerging Markets Corporate Debt I is best in class in Europe according to a survey by Morningstar.

Søren Bertelsen

Morningstar’s survey includes 223 funds investing in corporate debt in emerging markets. BI SICAV - Emerging Markets Corporate Debt I is the best performing fund with a European marketing authorisation in Morningstar’s category “Global Emerging Market Corporate Bonds EUR biased” in 2013-15. Only 125 funds in the category have a three-year track record.

"This is obviously a nice pat on the back for our strong belief in diligent country and company selection as basis for building a robust portfolio," says Chief Portfolio Manager Søren Bertelsen.

BI SICAV - Emerging Markets Corporate Debt exclusively invests in bonds from emerging markets. The fund’s assets are invested in bonds issued by companies in Latin America, Central or Eastern Europe, Africa, the Middle East and Asia (excluding Japan). The fund can also invest in securities issued by sovereign issuers, local authorities and companies that may be headquartered elsewhere but have the majority of their activities in an emerging market.

Avoiding losers
The fund’s objective is to generate robust and sustainable risk-adjusted excess returns for investors and thus outperform its benchmark, JP Morgan Corporate Emerging Markets Bond Index Broad Diversified (hedged to EUR). To meet this objective, the fund managers strive to avoid the losers.

Using proprietary country risk models and making assessments of a range of macroeconomic and political factors, the fund managers screen markets to identify countries that are structurally weak or could be heading for a crisis:  “Country selection is critical as even the strongest credit in a weak country may not perform if the country is structurally weak and on a deteriorating path,” says Søren Bertelsen.

Having minimized the number of issuers from structurally weak countries, the fund managers go through the company selection phase: A thorough credit analysis with strong emphasis on qualitative characteristics including analysis on governance, track record, and industry positioning to avoid defaults.  Emphasis is placed on the fundamental credit outlook rather than the company’s current momentum. Formal credit ratings do not drive the investment decision; the decision is driven by fundamental credit quality.

Large Emerging Markets team
Søren Bertelsen and Senior Portfolio Manager Chresten Hagelund work closely with fellow portfolio managers, analysts and traders from BankInvest’s teams for Emerging Markets Corporate Debt, Sovereign Debt, Equities and New Frontier Equities. A total of 15 people are dedicated to Emerging Markets across fixed income and equity portfolio management, analysis and trading, supported by an advisory board composed of political and economic experts.

"Being part of a large Emerging Markets team enables in-depth coverage of the universe and faster decision making. We meet on a daily basis, allowing us to benefit from the knowledge created by the separate teams and jointly through travelling, meetings and research," says Chresten Hagelund. 

BI SICAV - Emerging Markets Corporate Debt started the emerging market corporate strategy in 2009 and is one of few European funds in Morningstar’s category with more than five years history. The team, however, has invested in emerging markets corporate debt since 2001 and this track record is an asset, according to Søren Bertelsen:

"The market has changed significantly and frequently since 2001. We have witnessed a number of sovereign crisis and corporate distress situations over the years and this helps us navigating in volatile markets and identifying potential credit issues. These experiences have also confirmed our philosophy of reducing the drawdowns in periods of stress and limit our exposure to the lowest quality issuers even if they offer high and tempting spreads," says Søren Bertelsen.   

BI SICAV - Emerging Market Corporate Debts is currently invested in 135 bonds issued by corporations in 37 countries. The fund manages EUR 122 million, while the total AUM of the emerging market corporate debt strategy is EUR 370 million. 

EMCD Yield

 

Last updated: 01.21.2016