Barings to launch EM corporate debt fund

Baring Asset Management has announced that it is to launch a new emerging market corporate debt fund, subject to regulatory approval.

The Irish domiciled, Ucits-compliant Baring Emerging Markets Corporate Debt Fund will be run by Faisal Ali, who joined Barings in August 2011.

Faisal Ali comments: “We believe emerging market corporate debt has the potential to offer attractive risk-adjusted returns over the medium and long-term. This asset class has shown impressive growth over the past decade and today can rightly be considered as an asset class within its own right. The rise in issuance over the last two years, as many local corporates take advantage of the current climate of low yields and a relatively weak US dollar, has not gone unnoticed by foreign investors. As the economies of emerging markets continue to develop and mature, supported by favourable demographic and secular trends, high productivity rates and comparatively superior growth rates, we think the local corporate bond market should continue to expand to help finance and fund a growing consumer base.”

“Though the Fund will be denominated in US dollars, we will seek enhanced returns by using an innovative currency overlay, referencing the JP Morgan Emerging Markets Local Currency index to hedge the currency exposure back to EM local currencies. We believe most EM currencies should appreciate against developed market currencies over the long term.”

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