Sydinvest Emerging Markets

Investment Objective 

The investment objective of the Fund is to provide an attractive, positive outperformance to the Fund’s benchmark consistent with the preservation of capital and prudent investment management.

There can be no assurance that the Fund will achieve its investment objective.

The Fund will invest in a portfolio of fixed income securities issued or guaranteed by national governments of Emerging Market countries, their agencies or instrumentalities and political sub-divisions. The Fund may also take exposure to such fixed income securities indirectly.

Securities invested in will primarily be listed or traded on Recognised Exchanges worldwide, with a focus on Emerging Markets. However, up to 10% of the Net Asset Value of the Fund may be invested in fixed income securities not listed or traded on Recognised Exchanges.

Fixed income securities invested in may be denominated in US Dollars or other hard curren-cy. The types of fixed income securities the Fund may invest in includes, but is not limited to bonds (which may be fixed, floating or contingent cash flows) and notes (including structured notes which may contain embedded derivatives). Fixed rate debt securities are securities which carry a fixed rate of interest. Floating rate debt securities or securities with contingent cash flows are securities that carry variable coupon payments which may fluctuate with gen-eral market conditions.

“Emerging Markets” can be defined as, but is not limited to countries that are determined by the World Bank as having a low or middle per capita income. Examples include but are not limited to:

Algeria, Angola, Argentina, Azerbaijan, Bangladesh, Belize, Belorussia, Bosnia-Herzegovina, Botswana, Brazil, Cambodia, Central African Republic, Chile, China, Colombia, Croatia, Czech Republic, Democratic Republic of Congo, Dominican Republic, Egypt, El Salvador, Ethiopia, Gabon, Gambia, Georgia, Ghana, Hungary, India, Indonesia, Israel, Ivory Coast, Jamaica, Jordan, Kazakhstan, Kenya, Korea, Laos, Lebanon, Madagascar, Malaysia, Ma-lawi, Maldives, Mauritius, Mexico, Moldavia, Mongolia, Morocco, Mozambique, Nepal, Nige-ria, Pakistan, Panama, Peru, Philippines, Poland, Qatar, Russia, Senegal, Serbia, Slovakia, South Africa, Sri Lanka, Taiwan, Tanzania, Thailand, Tunisia, Turkey, UAE, Uganda, Ukraine, Uruguay, Venezuela, Vietnam and Zambia.

The Fund offer a potential excess return compared to traditional bond markets. The Fund’s investments will be hedged to EUR, which is the base currency of the fund.
 

Benchmark: The fund’s benchmark is JP Morgan EMBIG Diversified hedged to EUR.

Investment philosophy
The Fund will manage its investments in a prudent manner - the Investment Manager will continuously monitor and reassess return opportunities and risk exposures, as its own expectations change relative to market expectations.

The Fund invests in hard currency Emerging Market Debt and uses a combination of active on and off benchmark strategies in order to generate returns, within a tightly controlled quantitative risk environment. The Fund may use derivatives as a part of a disciplined investment process in order to reduce or limit risk or to generate market exposure without creating additional leverage.

Investment strategy
The Investment Manager bases the overall investment strategy on a rigorous fundamental and quantitative analysis of the global macro economy, fixed income and foreign exchange markets, giving special attention to valuation anomalies within the Emerging Markets universe. The Investment Manager intends to draw in general on its experience in the broad Emerging Markets universe, as well as draw more specifically on its expertise in under-researched, less developed countries, markets and instruments, which are not constituents of publicly available hard currency Emerging Market bond indices, in order to meet the Fund’s investment objective.

A “top-down” investment approach identifies market allocation and country selection, which is then combined with a “bottom up” analysis that enables the Investment Manager to select specific issuers and securities with the aim of achieving outperformance to the Fund’s benchmark.

The investment approach allows a diversified and actively managed portfolio to be identified and constructed in order to meet the Fund’s investment objective.

Market allocation
The Investment Manager determines the overall level of market exposure for the Fund based on top-down fundamental research and analysis of macro-economic, interest, credit and foreign exchange rate movements, thus taking strategic and cyclical themes into account.

Country allocation
The Investment Manager determines the potential for positive or negative price change in both fixed income securities and currencies in Emerging Market countries, due to the fundamental creditworthiness of a country’s external debt, interest rate or currency direction, using quantitative and qualitative methods.

Currency Management
The Fund will not invest in local currency directly. However, elements of the foreign currency analysis are included to enhance the Investment Manager’s decision on the proper investment strategy.

Relative value
The Investment Manager determines the “bottom up” micro-economic analysis of instrument type, investment horizon and exit strategy. This analysis is applied to identify investment instruments which the Investment Manager considers to be inherently undervalued or undervalued relative to another instrument.