In the back
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[ WHAT I BOUGHT LAST ]
We believe that a blended strategy
is better suited to accessing the full
opportunity-set that this diverse and
expansive universe has to offer
7IM’s Tony Lawrence says delegating asset-allocation decisions
makes perfect sense in areas such as emerging market debt “where
you are not living and breathing the developments”
Barings Emerging
Markets Debt Blended
Total Return
B
onds have
recently
reminded us why
they are a core allocation
in most portfolios;
yields have fallen like a
stone across developed
markets, creating capital
gains and mitigating
an increase in equity
volatility right on cue.
But with global yields
returning to wafer-thin
levels, this has again
raised questions about
the extent to which bonds
can protect against the
downside, challenging
the thesis that you need
to have a core allocation
to this asset class.
While we agree bonds
still have a role to play,
FE TRUSTNET
you need to pick your
spots and fully consider
the role this allocation
will fulfil. This has led us
to look more closely at
emerging market debt,
where there are still
opportunities to find
attractive yields per unit
of risk, with appealing
fundamentals such
as subdued inflation
and healthy economic
growth.
As such, we have
recently increased our
exposure to the asset
class, favouring a 50/50
blend between hard and
local currency issues, via
the Barings Emerging
Markets Debt Blended
Total Return fund.
We have invested with
the Barings emerging
markets debt team
since October 2016 and
provided early-stage
capital for its Emerging
Markets Local Debt
offering. We know the
team well and have been
equally impressed by the
track records of the other
products in its suite,
such as its US dollar
sovereign debt fund.
A previous life
Ricardo Adrogué, who
heads up the team, has
a wealth of experience
from his time as a
fund manager and in
a previous life as an
influential member of the
International Monetary
Fund (IMF), where
he dealt specifically
with emerging market
economies.
Barings Emerging
Markets Debt Blended
Total Return adopts
a flexible approach,
with an active foreign
exchange (FX) overlay.
It can use derivatives
to either hedge or
take advantage of
currency movements.
Corporate debt is fully
underwritten by a
well-resourced credit
research team.
This means Adrogué
and the team have
the freedom to take
the best ideas from all
their underlying areas
of expertise, feeding
into an impressive
blended product, with a
meticulous focus on risk
management.
to an experienced and
well-resourced team
makes perfect sense.
This fund is a highly
complementary strategy
for our portfolios and
supports our view that
emerging market debt
Perfect sense
We believe that a blended will deliver significant
value in the long run.
strategy is better suited
to accessing the full
opportunity-set that this
diverse and expansive
universe has to offer. It
is difficult for an asset
allocator to be positioned
in the most efficient
way when you are not
living and breathing the
developments in this
Tony Lawrence is
vast array of markets and
a senior investment
economies; delegating
manager at 7IM
this allocation decision
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