Emerging Market Debt Total Return
HSBC’s Global Emerging Market Debt (EMD) Total Return strategy employs an unconstrained approach to emerging markets debt investing and is not normally managed with explicit reference to a benchmark index. The strategy represents the purest expression of the investment team’s views across the full range of available emerging market debt asset classes - including external debt (sovereign and corporate) and local debt (rates and currencies). We believe the flexibility of this approach is particularly well suited to meet the needs of investors seeking to gain exposure to the asset class, but with less volatility and drawdown risk. The strategy maintains a net positive beta to the asset class, tactically employing both long and short strategies to better optimize risk-adjusted return compared to benchmark strategies.
Emerging Market Debt Total Return
HSBC’s Global Emerging Market Debt (EMD) Total Return strategy employs an unconstrained approach to emerging markets debt investing and is not normally managed with explicit reference to a benchmark index. The strategy represents the purest expression of the investment team’s views across the full range of available emerging market debt asset classes - including external debt (sovereign and corporate) and local debt (rates and currencies). We believe the flexibility of this approach is particularly well suited to meet the needs of investors seeking to gain exposure to the asset class, but with less volatility and drawdown risk. The strategy maintains a net positive beta to the asset class, tactically employing both long and short strategies to better optimize risk-adjusted return compared to benchmark strategies.
Emerging Market Debt Total Return
HSBC’s Global Emerging Market Debt (EMD) Total Return strategy employs an unconstrained approach to emerging markets debt investing and is not normally managed with explicit reference to a benchmark index. The strategy represents the purest expression of the investment team’s views across the full range of available emerging market debt asset classes - including external debt (sovereign and corporate) and local debt (rates and currencies). We believe the flexibility of this approach is particularly well suited to meet the needs of investors seeking to gain exposure to the asset class, but with less volatility and drawdown risk. The strategy maintains a net positive beta to the asset class, tactically employing both long and short strategies to better optimize risk-adjusted return compared to benchmark strategies.
Emerging Market Debt Total Return
HSBC’s Global Emerging Market Debt (EMD) Total Return strategy employs an unconstrained approach to emerging markets debt investing and is not normally managed with explicit reference to a benchmark index. The strategy represents the purest expression of the investment team’s views across the full range of available emerging market debt asset classes - including external debt (sovereign and corporate) and local debt (rates and currencies). We believe the flexibility of this approach is particularly well suited to meet the needs of investors seeking to gain exposure to the asset class, but with less volatility and drawdown risk. The strategy maintains a net positive beta to the asset class, tactically employing both long and short strategies to better optimize risk-adjusted return compared to benchmark strategies.
The objective of the Emerging Markets Debt Total Return strategy is to capture as much upside of the emerging markets debt universe as possible while providing capital protection through a substantially lower volatility ranging from 50 per cent – 75 per cent of the underlying market.
Our Philosophy
Our Global Emerging Markets Debt investment strategies are based on our conviction that the active fundamental approach identifies valuation gaps and harvests alpha in a disciplined way. Our portfolios reflect our teams top-down view, combined with deep, fundamental research, which gives us the best opportunity to actively add value. We believe in alpha discipline, constructing portfolios with diversified sources of risk, to lower volatility and increase the information ratio.
We also believe that the flexibility to select from the widest universe of opportunities, across the full range of emerging markets debt instruments can provide investors with the best opportunity to potentially add value in portfolios.
Our process
Our EMD total return strategies use an opportunistic approach to invest selectively (using long and short positions) across all EMD segments. They seek to provide superior risk-adjusted total returns with a focus on capturing maximum upside potential while minimizing volatility and drawdowns.
- Flexible asset allocation decisions across EM hard currency and local debt assets serve as a key performance driver for the total return strategies. The strategies exploit inefficiencies in the EMD asset class and can express short-, medium- and long-term views independent of a benchmark
- We integrate macroeconomic views, themes and catalysts with detailed country/currency fundamentals and relative valuation analysis. We also analyze market pricing action, yield curves and spreads to help us determine our investment entry points
- A robust and reiterative risk management framework allows us to calibrate and optimize our positions and exposures using stress-testing and scenario-based analytics
HSBC Asset Management strengths
Emerging markets are part of our corporate DNA and we have over 20 years of experience managing Global Emerging Markets Debt portfolio – one of the longest track records in the space.
- A global investment platform allows us to leverage the insights and local knowledge of our on-the-ground network of analysts and investment professionals from across the world. As research drives our process, the dedicated corporate and sovereign analysts’ views drive the direction of portfolio manager trades. Portfolio managers focus on valuations, technicals and timing of investment entry/exit to harvest alpha most efficiently
- To analyze the large investment universe, the sovereign analysts are 100 per cent dedicated to research, utilizing a focused balance of payments and debt sustainability methodology to forecast structural trends and predict relative credit spread moves for all 70+ countries within the investment universe
- The connectivity provided by a Global Credit Platform comprised of over 40 credit analysts world-wide, including 20 on-the-ground dedicated emerging markets credit analysts, is essential in today’s world, and is particularly important in the management of emerging markets corporate debt assets
For more information or to discuss your investment strategy, contact us.
Risks in consideration
There is no assurance that a portfolio will achieve its investment objective or will work under all market conditions. The value of investments may go down as well as up and you may not get back the amount originally invested. Portfolios may be subject to certain additional risks, which should be considered carefully along with their investment objectives and fees.
- Fixed income is subject to credit and interest rate risk. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rate risk refers to fluctuations in the value of a fixed income security that result from changes in the general level of interest rates. In a declining interest rate environment, a portfolio may generate less income. In a rising interest-rate environment, bond prices fall
- High Yield Investments in high yield securities (commonly referred to as “junk bonds”) are often considered speculative investments and have significantly higher credit risk than investment grade securities. The prices of high yield securities, which may be less liquid than higher rated securities, may be more volatile and more vulnerable to adverse market, economic or political conditions
- Foreign and emerging markets Investments in foreign markets involve risks such as currency rate fluctuations, potential differences in accounting and taxation policies, as well as possible political, economic, and market risks. These risks are heightened for investments in emerging markets which are also subject to greater illiquidity and volatility than developed foreign markets
- Derivative instruments Derivatives can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on performance
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