Investec Emerging Markets Local Currency Debt

It is hardly surprising that FE Trustnet readers have been taking a close interest in the £2bn Investec Emerging Markets Local Currency Debt fund. Returns of 97.12 per cent over the last five years make it the fourth-best performing fund in the entire IMA universe over the last five years.

Global bond funds have benefitted from a global currency rally in the opening months of 2012 and many analysts predict the trend will continue.

Emerging market fixed interest is a growing investment theme as low growth and high levels of debt in the developed world make traditional corporate bond portfolios a riskier proposition. Many emerging market economies on the other hand have tackled inflation and feature an environment that is more conducive to fixed interest investment.

Investing in local currency affords FE Alpha Manager Peter Eerdmans the benefit of appreciation against sterling. Quantitative easing is weakening many hard currencies, while their counterparts in emerging markets are getting stronger, and Eerdmans believes this is a theme that will continue. For example he sees promise in the Russian rouble following a rise in the oil price.

The fund has a TER of 1.63 per cent and is generally regarded by IFAs as the best product of its type. Its headline yield of 6.09 per cent also provides investors with a high level of income.



Source: FE Analytics


Old Mutual Global Strategic Bond

The £629m Old Mutual Global Strategic Bond fund has performed consistently well over a long period. FE data shows that it is top-quartile over three, five and 10 years and has returned 98.84 per cent over the last decade compared with 70.72 per cent from the average fund in the Global Bonds sector.

FE Alpha Manager Stewart Cowley is a highly regarded fund manager with around 20 years of investment experience. The fund is run with an unconstrained, go-anywhere approach and an emphasis on capital preservation.

Cowley looks to boost the performance of the portfolio through currency positions and has recently upped his exposure to the eurozone, believing that political and fiscal problems are close to being resolved. Investors who are still pessimistic about a resolution to the crisis should think about investing elsewhere.

"Core government bonds offer little value given current yields and upcoming issuance," said Cowley in a recent note to unit holders.

"Austerity will reduce economic activity, but growth remains positive in leading markets, while companies continue to operate with low default rates, healthy margins and strong balance sheets. We expect to maintain low-to-negative duration in governments, cautiously seeking to add corporate exposure and capture the growth of emerging markets through currency proxies."



Source: FE Analytics


M&G International Sovereign Bond

The M&G International Sovereign Bond fund is, as the name suggests, invested predominantly in the safest investment grade government bonds from around the world. These include the economies of Australia, Canada, Japan, New Zealand, the US and Switzerland.

Traditionally this type of product would have provided a low-volatility return on investments. However, the escalation of the global debt crisis means that government securities are no longer the safe-haven they once were and now require a great deal more active management.

Our data shows the fund, run by Mike Riddell, has returned 84.04 per cent over the last five years, more than any other of its type. It has also beaten the Global Bonds sector average over 10 years.



Source: FE Analytics