Claudia Calich’s $351m fund is the only one of 101 in the sector to achieve the feat, lending credence to the case for emerging market debt as an asset class, even though it is a relatively new concept for retail investors.
In the first five-year period, Invesco Emerging Markets Bond returned 50.76 per cent, which was beaten by only three Global Bonds funds. In the last five years, Calich has delivered 88.83 per cent, again a figure beaten by only a handful of portfolios.
Over the cumulative 10-year period, Calich’s fund has returned 185.72 per cent – more than 100 percentage points more than the average Global Bonds portfolio.
It should be noted, however, that it has fallen short of its JPM GBI-EM Global Composite benchmark over the period.
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
As well as topping the performance tables, the fund has also been one of the least volatile.
The Dublin-domiciled vehicle has achieved a Sharpe ratio of 0.70 over the decade, the highest in the entire sector.
The ratio measures the fund’s return relative to a notional risk-free investment – in this case, cash. The difference in returns is then divided by the fund’s volatility.
Achieving the highest Sharpe ratio indicates that the fund has delivered the greatest risk-adjusted returns despite investing in what is traditionally perceived to be one of the more volatile areas of the bond market.
More than half of the fund is invested in international or Pacific Basin bonds, with nearly 40 per cent in BBB rated paper.
The fund is currently yielding 4.91 per cent – a top-quartile figure for the sector.
It has a minimum investment of $1,500, a minimum top-up of $500 and a total expense ratio (TER) of 1.28 per cent. Calich has headed up the portfolio since June 2004.
Most consistent funds in IMA Global Bonds sector
| Fund | Returns (%) 2002-2007 | Returns (%) 2002-2007 |
| Invesco Emerging Markets Bond | 50.76 | 87.91 |
| M&G Emerging Markets Bond | 38.54 | 68.57 |
| Investec Global Strategic Income | 37.42 | 68.57 |
Source: FE Analytics
Ben Seager-Scott, senior research analyst at Bestinvest, says the manager’s high degree of flexibility has worked well for the fund so far, but could be seen as a significant risk for cautious investors.
"Although benchmarked against the JPM EMBI Global index, the manager has a fairly flexible mandate that allows her to take positions in emerging market corporate bonds and take active positions based on local currencies," he commented.
"Currently more than a quarter of the fund is held in such benchmark positions. This flexible mandate could be a benefit to investors as it allows the manager to be tactical when she believes there are more attractive opportunities away from the benchmark, but this can be a risk; for example when there are market shocks."
"This is perhaps exemplified by the strong performance we have seen from the fund over three years, but when we look at five-year performance, the manager has underperformed the benchmark after suffering a significant downturn in the financial crisis in 2008 to 2009."
Although the Invesco fund was the only one to achieve consecutive top-quartile returns, emerging market bond funds fared well in general.
The £23.9m M&G Emerging Markets Bond fund finished second in the study, and Threadneedle Emerging Market Bond and Investec Emerging Markets Local Currency Debt are both on course to achieve the accolade once they reach their 10th anniversary.