Growth recovery coupled with commodity price stabilisation injected new life into emerging market bonds, with hard currency corporate debt delivering 9.7% after a difficult 2015 (due primarily to expectations of US rate normalisation and dollar strengthening). In many cases, 2016 was a mirror image of the previous year for commodity credit nations like Brazil, whose sovereign local currency bonds delivered-31.2% and +58.5% in 2015 and 2016, respectively.
Even so, 2016 was not a year to passively trade the broad market with idiosyncratic risks leading to a wide dispersion of returns. Mexican credit suffered major FX losses due to a Trump victory replete with threats to build a wall and withdraw from NAFTA. Economic and political fears led major rating agencies to downgrade Turkey’s credit and the lira plunged to an all-time low against USD as of January 2017.
The low-rate environment that persists in developed markets, despite growing confidence that the US will tighten, and the desire to diversify globally, continues to drive Asia’s yield hungry HNWIs to unfamiliar or even unchartered territories. This trend is not expected to subside. But investing in such a broad market with myriad idiosyncrasies demands proven bottom-up expertise.
Since its founding in 1992, Ashmore has focused exclusively on emerging markets, managing strategies that cover equity, fixed income, distressed, overlay and more. Its active, team-based investment process is uniquely tailored for emerging market investing and has remained consistent throughout market cycles and global crises. As of end-2016, more than 80% of Ashmore Group’s assets under management were outperforming their respective benchmarks over three and five-year periods.
And within emerging market bonds, Ashmore delivers a diversified shelf of solutions across low-volatility absolute return, short-duration and fixed maturity bond strategies to private banks throughout the region.
In a private banking industry that is focused on streamlining and cost-cutting, it is increasingly important to weigh the costs and benefits of dealing with multiple asset managers delivering marginal outperformance as opposed to a one-stop shop that can consistently deliver across asset classes. With a global team of 245, including 75 investment professionals, Ashmore is by no means a giant within the asset management industry; but fund selectors have given the firm their vote of confidence, selecting it as this year’s Best Fund Provider – Global Emerging Market Bond.