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Nomura Funds Ireland – Emerging Market Local Currency Debt Fund

Asset Class

The “Emerging Market Local Currency Bonds” asset class offers an attractive mix of performance drivers covering all stages of the business cycle:

Emerging Markets: Very attractive local government bond yields with moderate credit risk (the majority of core markets has at least one investment grade rating); significant potential for diversification due to heterogeneous economic structures, differing business cycles and a variety of currency regimes.

Local Currency: The FX component tends to benefit – like equities – from improving growth prospects during an economic expansion and boom phase (enabling participation in the “EM growth story”).

Bonds: The interest rate/duration component tends to benefit from reduced growth prospects during an economic contraction and recession phase, when central banks cut interest rates (active FX management is essential in this phase).

Investment Approach

Quality-conscious: Our philosophy “value instead of carry” emphasises the management of FX and interest rate risk, with less focus on credit risk; our total return approach seeks to generate a balanced value-added from interest income, capital appreciation and currency management.

Concentrate and diversify: Our high conviction, macro-based portfolio concentrates on a selection of major (benchmark) markets; diversification is added by exploiting less correlated risk opportunities from the off-benchmark parts of our universe.

Dynamic, contrarian risk capital allocation:  We screen for and distribute capital flexibly between tactical and strategic investment ideas. We seek to avoid allocating risk capital pro-cyclically and to minimize uncompensated and unintended risks. The use of derivatives is essential to our approach.

Holistic risk management: Our Sharpe ratio-oriented risk management aims to smooth volatility and drawdown to achieve an optimal risk-adjusted return. Essential tools are long/short FX strategies and active beta and cash management.

Team oriented approach: Our investment team consisting of 3 experienced investment professionals divides up the universe by risk drivers (EM rates, EM FX, global factors) and not by regions for top-down analysis and bottom-up idea generation.

Target: Outperformance over the cycle versus benchmark as well as versus peers and with a risk-adjusted return above the benchmark.

Investment Strategy

We offer an Emerging Market local currency bond product

  • with active currency management versus USD.
  • with an average investment grade rating (currently ~BBB) and a very attractive yield to maturity (currently 6-7%).
  • which invests in local currency bonds issued by governments, government agencies quasi-sovereign entities and supranational organisations (hard currency bonds and corporates may be added opportunistically).
  • which offers significant potential for diversification within a global, heterogeneous universe.
  • Benchmark: JPM GBI-EM GD Unhedged USD (Ticker: JGENVUUG Index); coverage: 15 emerging markets in Asia, Latin America, Eastern Europe and Africa.

Historically, global EM currencies and interest rates markets have been highly dynamic; a significant interest rate differential to developed markets exists.

 

 

Potential Significant Risks

Emerging markets or less developed countries may face more political, economic or structural challenges than developed countries.

Investment Objective

Our Emerging Market local currency bond product with dynamically managed FX exposure vs. USD uses an “active value”, benchmark-cognizant approach to generate superior risk-adjusted returns. We research global and local influences on EM currencies and debt and then seek and exploit opportunities we find in both currency and duration positions.

Fund Size

USD 41.3 million (as at 31.08.2023)

Investment Company

Nomura Asset Management U.K. Ltd.

Fund Management

    

Dr. Recai Gunesdogdu,
Senior Portfolio Manager Fixed Income Emerging Markets,
Nomura Asset Management Europe KVG mbH

Launch Date

27.02.2015

Base Currency

USD

Sector

Fixed Income – Emerging Markets

Benchmark

JPM GBI-EM Global Diversified Composite Unhedged USD

Domicile

Ireland

Others

Further information can be found on the website of Nomura Asset Management U.K. Ltd. (You will leave the website of Nomura Asset Management Europe KVG mbH and will switch to the website of Nomura Asset Management U.K. Ltd.)

Fund ISIN Annual
Report
Semi-annual
Report
Fact
Sheet
Sales
Prospectus
PRIIPs KIDs
(English)
Class A EUR IE00BSJCG044
Class A USD IE00BSJCFZ22
Class AD EUR IE00BSJCG713
Class AD USD IE00BSJCG606
Class I EUR IE00BSJCG481
Class I USD IE00BSJCG374
Class ID EUR IE00BSJCGB52
Class ID USD IE00BSJCGC69

A German version of the prospectus can be found here.

The English version of the prospectus is legally binding.

The table comprises a selection of the current available share classes (partly not yet active) for the stated Nomura Funds Ireland plc. mutual fund.

As per January 2023

A complete overview of all available share classes and documents of the Nomura Funds Ireland plc can be found here. 

(Please note that the link will access a website for contents of we assume no responsibility and to which our data protection rules do not apply.)