Muzinich launches EM debt fund
Corporate credit-focused asset manager Muzinich & Co has launched the Muzinich Emerging Market Debt Fund.
The Ireland-domiciled OEIC fund provides investors with access to high return potential available from regular duration emerging market credit.
The fund seeks to outperform the BofA Merrill Lynch Emerging Markets Corporate Liquid Index (EMCL) by around 150 basis points over a market cycle.
Warren Hyland, portfolio manager of the fund, said: “The economic cycle is shifting. We’re moving from an environment where deflation and economic slowdown were the primary concerns to one of reflation and rising interest rates, where growth drivers are coming to the fore.
“That means we are seeing more opportunity for capital gains from regular duration emerging market debt, as opposed to short duration, which is more focused on capital preservation and about clipping emerging markets’ superior coupons.”
“Over the next 12 months, we’re targeting returns of around 5% to 6%, assuming that our current positive investment outlook for regular duration emerging market credit remains broadly in place,” he added.
Also the fund will invest in hard currency denominated debt such as the US dollar, yen, euro and sterling.
Hyland highlighted: “Currency markets can be very volatile and this is especially the case for emerging markets. Our expertise is in bottom-up, fundamental credit research, which Muzinich has been doing very successfully for more than 30 years.
“Our core approach to credit investing – whatever the underlying market – remains an explicit focus on capital preservation, achieved by undertaking rigorous bottom-up credit research into each and every company we consider for our portfolios, and only loaning money to companies that we believe will be able to meet their debt repayments over the term of the bond.”