Emerging Markets Debt | Capital Group

TOTAL RETURN FIXED INCOME

Emerging Markets Debt

Vehicle: Collective Investment Trust, Separate Account

Overview

Objective: Seeks, over the long term, high total return, of which a large component is current income, by investing primarily in fixed income and hybrid securities of developing-country issuers (both corporate and sovereign).

  • Strategy inception date: 2006
  • Assets in strategy (billions): $5.6
  • Benchmark:
    • 50% J.P. Morgan EMBI Global Diversified
    • 50% J.P. Morgan GBI-EM Global Diversified
  • Currency (%)
    • Local currency: 0–100
    • USD allocation: 0–100
  • Invests in:
    • Emerging markets debt
      • Sovereign
      • Quasi-sovereign/Corporate
      • Inflation linked
  • Minimum account size (millions):
    • Collective investment trust: $5
    • Separate account: $100

Assets in strategy as of June 30, 2018.

For a DC collective investment trust, plan size of $250 million may be used to satisfy the minimum account size requirement.


Approach
  • Research is the cornerstone of our investment process, which integrates macroeconomic, fixed income and equity analysis from all regions of the globe
  • An emerging markets debt analyst at Capital typically focuses on countries in a geographic area — for example, Latin America, Eastern Europe or Africa — to enhance their assessment of relative value and the characteristics of each market
  • The fixed income analysts also work with Capital’s equity research team. In addition, a strategic group is dedicated to currencies, asset allocation, quantitative research, politics and other macro issues
  • The Emerging Markets Debt investment team consists of two portfolio managers, each of whom is responsible for a portion of the portfolio and manages it as if it were a stand-alone entity. This ensures the portfolio has diverse sources of return
  • The portfolio managers look for value in securities that feature solid or improving credit quality not yet recognized by the market and for which significant risk premiums are being paid by the issuer
  • Portfolio managers also work closely with Capital’s traders, who provide valuable information about market anomalies, inefficiencies and deal flow in addition to executing trades
  • We have a comprehensive framework for addressing risk
    • Our research process and The Capital SystemSM help diversify the portfolio
    • Capital’s independent global investment control group monitors compliance with portfolio guidelines
    • Our legal and compliance team helps make certain we adhere to regulations in the markets in which we invest

History of Fixed Income at Capital Group

We began managing fixed income assets for institutional clients in 1973, and Capital Fixed Income Investors has $321.4 billion in assets under management as of June 30, 2018. Capital has more than 20 years’ experience investing in emerging markets. We began investing in emerging markets debt in 1991, had our first dedicated emerging markets debt account in 1994, and established a global high-yield strategy that combined emerging markets and U.S. high-yield debt in 1998.

 


Portfolio Management Team

 


 


 


Resources


Additional Reports

Annual Report (PDF)

Endowments/Foundations

Tax-Exempt Trusts Annual Report (PDF)

 

 

 


The Capital Group companies manage equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fi ed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.

Any collective investment trusts (“CITs”) available under this strategy are maintained by Capital Bank and Trust Company (“trustee”), which has retained an affiliate to serve as investment adviser to the trustee for the CITs.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses/summary prospectuses, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer.


Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.