GLG Emerging Markets Debt

The GLG Emerging Markets Debt strategies provide access to the complex universe of Emerging Markets debt through three distinct investment opportunities, all of which are managed by a seasoned investment team:
 

Investment Opportunities:

  1. Emerging Markets Local Currency Rates
  2. Emerging Markets Hard Currency Debt
  3. Emerging Markets Debt Total Return
 

The team believes in three fundamental tenets:

  • Emerging Markets debt and currency markets are inefficient
  • Inefficiencies are a result of the incorrect understanding and pricing of risk
  • An approach to investing that adds value by combining deep fundamental research with top down and quantitative screening

Approach

In summary, the team's key differentiators are:

  • Guillermo Ossés, Head of Emerging Markets Debt Strategies, has broad experience across all aspects of emerging markets debt investing including credit analysis, currency and rates trading
  • Portfolio managers who are specialists in their own areas, which creates diversification and fosters responsiveness 
  • The application of a strong valuation discipline to asses fundamental views and express them efficiently 
  • Strong risk management discipline helps to maximise information ratio and optimise model portfolio

Fundamental analysis and relative valuation are at the core of the investment process which is further enhanced by top-down views.

The investment process consists of four broad stages:

  • Bottom-up analysis - Based on proprietary models that aim to construct rankings of country credits, currencies and rates based on relative attractiveness and perform valuation analysis to determine if asset prices reflect the team's views on relative attractiveness. Much of the security selection for each country will be focused on identifying the richest / cheapest instruments across the curve.
  • Top down analysis and consideration of positioning - Any fundamental views are reconciled with top down views prior to implementation. In addition to macro themes and global scenarios, the team consider the degree to which there is crowding in the investment identified via bottom up analysis.
  • Model portfolio construction - Construction of the model portfolio is built around targets and available securities. The team uses the same process for all the portfolios with certain tweaks for each strategy and in particular the Total Return as there is more shorting involved.
  • Stress testing - Testing is conducted to ensure that the portfolios meet the tracking error, volatility and drawdown targets applicable. The sensitivity of each portfolio to different risk factors is assessed for consistency with the general macro view that the team has developed as part of the top down process.
Approach Long
Asset Class Fixed Income
Geographic Focus Emerging Markets
Benchmark
EM Local Currency Rates JPM GBI-EM Global Diversified
EM Hard Currency Debt JPM EMBI Global
EM Debt Total Return NA

The indices listed are appropriate benchmarks for the Strategies.

Manager(s)

Guillermo Ossés
Guillermo Ossés
Head of Emerging-Market Debt Strategies, Man GLG
Phil Yuhn
Phil Yuhn
Portfolio Manager, Man GLG
Lisa Chua
Lisa Chua
Portfolio Manager, Man GLG
Jose Wynne
Jose Wynne, PhD
Portfolio Manager, Man GLG
Ehsan Bashi
Ehsan Bashi
Portfolio Manager, Man GLG

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Why market positioning is just as important as fundamentals and valuations when investing in emerging-market debt.

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Considerations

One should carefully consider the risks associated with investing, whether the strategy suits your investment requirements and whether you have sufficient resources to bear any losses which may result from an investment:

Investment Objective Risk - There is no guarantee that the Strategy will achieve its investment objective.

Market Risk - The Strategy is subject to normal market fluctuations and the risks associated with investing in international securities markets and therefore the value of your investment and the income from it may rise as well as fall and you may not get back the amount originally invested.

Counterparty Risk - The Strategy will be exposed to credit risk on counterparties with which it trades in relation to on-exchange traded instruments such as futures and options and where applicable, ‘over-the- counter’("OTC","non-exchange") transactions. OTC instruments may also be less liquid and are not afforded the same protections that may apply to participants trading instruments on an organised exchange.

Currency Risk - The value of investments designated in another currency may rise and fall due to exchange rate fluctuations. Adverse movements in currency exchange rates may result in a decrease in return and a loss of capital. It may not be possible or practicable to successfully hedge against the currency risk exposure in all circumstances.

Liquidity Risk - The Strategy may make investments or hold trading positions in markets that are volatile and which may become illiquid. Timely and cost efficient sale of trading positions can be impaired by decreased trading volume and/or increased price volatility..

Concentration Risk - The Strategy invests in a limited number of investments may be held which can increase the volatility of performance.

Financial Derivatives - The Strategy will invest financial derivative instruments ("FDI") (instruments whose prices are dependent on one or more underlying asset) to achieve its investment objective. The use of FDI involves additional risks such as high sensitivity to price movements of the asset on which it is based. The extensive use of FDI may significantly multiply the gains or losses.

Leverage - The Strategy's use of FDI may result in increased leverage which may lead to significant losses.

Emerging Markets - The Strategy may invest a significant proportion of its assets in securities with exposure to emerging markets which involve additional risks relating to matters such as the illiquidity of securities and the potentially volatile nature of markets not typically associated with investing in other more established economies or markets.

Non-Investment Grade Securities - The Strategy may invest a significant proportion of its assets in non-investment grade securities (such as “high yield” securities) are considered higher risk investments that may cause income and principal losses for the Strategy. They are instruments which credit agencies have given a rating which indicates a higher risk of default. The market values for high yield bonds and other instruments tend to be volatile and they are less liquid than investment grade securities.