02.09.2013

Investing in debt markets across the world, the WIOF Global Emerging Markets Bond Fund offers investors the chance to take advantage of emerging markets’ fundamental potential and the opportunities of investing in a complete range of sovereign and corporate bonds in hard and local currency.

 

OVERVIEW

The Fund offers exposure to the entire range of global emerging market (EM) debt markets - hard currency sovereign and corporate debt as well as local currency debt in markets in Europe, Asia, Africa, the Middle East and Latin America. Aimed at maximising total investment return, the Fund is ideal for investors interested in specialised capital markets.

A BETTER PROSPECT

As the global financial crisis fails to abate, investors are turning away from struggling developed markets towards emerging markets. Attracted by the positive structural and fundamental characteristics of emerging market economies, including, for instance, generally much stronger economic growth and debt-to-GDP ratios, emerging markets are seen by many investors as offering better prospects for returns. The relatively strong debt positions of many emerging markets in comparison to developed states is one of the biggest draws for investors: while the average debt burden of developed markets is above 100% of GDP, the figure in emerging markets is less than 40% of GDP. As Mirko Matic, portfolio manager for the WIOF Global Emerging Markets Bond Fund explains: “Emerging market debt has historically outperformed other fixed income classes and that trend is set to continue due to favourable fundamentals.”

 

GLOBAL CHOICE

The global nature of the Fund allows investors to take advantage of the positive qualities of diverse emerging market regions to make the best of their investment. Each emerging market region in the Fund’s investment focus has strong fundamentals which underpin its investment opportunities:

  • CIS countries’ public finance positions have remained relatively strong compared to other regions.
  • Emerging Europe is persistently undervalued to its actual credit ratings and has a firmly-intact growth story which continues to unfold.
  • Latin America’s economies are in good shape and strong domestic demand is sustaining the growth of key regional economies.

 

INVESTMENT PROCESS

The portfolio manager employs a complex investment and asset allocation process including:

 

  • The use of custom-made portfolio optimization models combining fundamental and quantitative investment strategies
  • Implementation of custom-designed algorithmic trading systems

 

The company also engages in enhanced index tracking portfolio management designed to beat a benchmark or comparative index. This involves:

 

  • Regression analysis
  • Sector weight matching
  • Macroeconomic analysis
  • Sector analysis

 

OUTLOOK

The performance of the EM debt markets will mostly depend on changes in the US Federal Reserve’s monetary policy. The market overreacted to recent speculation on the Federal Reserve’s tapering of monetary stimulus and subsequent valuations created attractive opportunities in EM bond markets. Some emerging economies are facing difficulties as they struggle to improve fundamentals, but in the foreseeable future, growth in most emerging economies is still expected to exceed that in the developed world. Moreover, reduced growth expectations could increase the probability of upside surprises in emerging economies. But market volatility will most probably remain elevated due to uncertainty about when the US Federal Reserve will pull back on monetary stimulus.

INVESTMENT ADVISER

The Fund’s investment adviser is NFD Aureus Invest d.d. - the largest private asset management company in Croatia. Boasting one of the most diversified product portfolios among asset management companies in the region, it is also recognized for its innovative asset management concepts and technologies. The company has developed custom-made portfolio optimization models which combine fundamental and quantitative investment strategies aimed at reducing the subjective decisions of fund managers as part of an active management stock picking process.

 

IMPORTANT NOTE: This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Investment Opportunities Funds (“WIOF”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 17 December 2010 on collective investment undertakings as an open-ended investment company. WIOF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WIOF prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser/legal adviser/tax adviser and refer to all relevant documents relating to the WIOF and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser/legal adviser/tax adviser, they should consider whether the WIOF is a suitable investment for them.