BNY Mellon fund launch targets EM corporate debt

BNY Mellon has launched an emerging markets corporate debt fund, to be managed by its subsidiary, Insight Investment Management.

The BNY Mellon Emerging Markets Corporate Debt Fund is a Ucits fund offering daily pricing liquidity, and is a sub-fund of the Dublin-domiciled BNY Mellon Global Funds range.

Colm McDonagh, head of Insight Investment’s emerging market debt team, will manage the fund. He will build a globally diversified ‘best ideas’ portfolio seeking to invest in the most compelling risk-adjusted opportunities, irrespective of benchmark weighting, from both US Dollar and local currency issuers.

His aim is to generate “a total return comprised of income and capital growth by investing primarily in corporate debt and related financial derivative instruments issued by emerging market issuers worldwide”.

A core aim of the fund, BNY Mellon says, will be to “capture the existing structural premium available from emerging market issuers compared with similar corporate issuers in developed markets.

The fund will invest in the credit improvement of newer issuers as emerging countries gain a more significant share of global GDP and global trade. “The focus will be investment in issues of a sufficient size to ensure good liquidity,” BNY Mellon said. 

Alan Mearns, chief executive of BNY Mellon Asset Management International, said: “We believe that the emerging market corporate debt asset class is the next significant ‘structural’ component within the emerging market universe.”

Abdallah Nauphal, chief executive at Insight Investment, said: “We believe we are well placed to identify the corporate bond investment ideas with the most attractive risk/reward characteristics from the growing emerging market corporate debt sector and to deliver positive returns over the medium-to-long term for our clients.”

McDonagh added: “With over 35% of the world’s GDP represented by emerging market countries, and likely to reach 50% in 10 years, it is expected that future economic growth will be driven from these regions. Emerging market corporates have always been part of our investment opportunity, however the asset class has gained significant depth over recent years. 

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