Nomura Funds Ireland –
Emerging Market Local Currency Debt Fund
Access to fast-growing debt markets,
strong fundamentals and high yields
Nomura Funds Ireland – Emerging Market Local Currency Debt Fund
Asset Class
The “Emerging Market Local Currency Bonds” asset class offers an attractive mix of performance drivers covering all stages of the business cycle:
Emerging Markets: Very attractive local government bond yields with moderate credit risk (the majority of core markets has at least one investment grade rating); significant potential for diversification due to heterogeneous economic structures, differing business cycles and a variety of currency regimes.
Local Currency: The FX component tends to benefit – like equities – from improving growth prospects during an economic expansion and boom phase (enabling participation in the “EM growth story”).
Bonds: The interest rate/duration component tends to benefit from reduced growth prospects during an economic contraction and recession phase, when central banks cut interest rates (active FX management is essential in this phase).
Investment Approach
Quality-conscious: Our philosophy “value instead of carry” emphasises the management of FX and interest rate risk, with less focus on credit risk; our total return approach seeks to generate a balanced value-added from interest income, capital appreciation and currency management.
Concentrate and diversify: Our high conviction, macro-based portfolio concentrates on a selection of major (benchmark) markets; diversification is added by exploiting less correlated risk opportunities from the off-benchmark parts of our universe.
Dynamic, contrarian risk capital allocation: We screen for and distribute capital flexibly between tactical and strategic investment ideas. We seek to avoid allocating risk capital pro-cyclically and to minimize uncompensated and unintended risks. The use of derivatives is essential to our approach.
Holistic risk management: Our Sharpe ratio-oriented risk management aims to smooth volatility and drawdown to achieve an optimal risk-adjusted return. Essential tools are long/short FX strategies and active beta and cash management.
Team oriented approach: Our investment team consisting of 3 experienced investment professionals divides up the universe by risk drivers (EM rates, EM FX, global factors) and not by regions for top-down analysis and bottom-up idea generation.
Target: Outperformance over the cycle versus benchmark as well as versus peers and with a risk-adjusted return above the benchmark.
Investment Strategy
We offer an Emerging Market local currency bond product
- with active currency management versus USD.
- with an average investment grade rating (currently ~BBB) and a very attractive yield to maturity (currently 6-7%).
- which invests in local currency bonds issued by governments, government agencies quasi-sovereign entities and supranational organisations (hard currency bonds and corporates may be added opportunistically).
- which offers significant potential for diversification within a global, heterogeneous universe.
- Benchmark: JPM GBI-EM GD Unhedged USD (Ticker: JGENVUUG Index); coverage: 15 emerging markets in Asia, Latin America, Eastern Europe and Africa.
Historically, global EM currencies and interest rates markets have been highly dynamic; a significant interest rate differential to developed markets exists.
Potential Significant Risks
Emerging markets or less developed countries may face more political, economic or structural challenges than developed countries.
| Investment Objective | Our Emerging Market local currency bond product with dynamically managed FX exposure vs. USD uses an “active value”, benchmark-cognizant approach to generate superior risk-adjusted returns. We research global and local influences on EM currencies and debt and then seek and exploit opportunities we find in both currency and duration positions. |
| Fund Size | USD 40.2 million (as at 31.03.2024) |
| Investment Company | Nomura Asset Management U.K. Ltd. |
| Fund Management | Dr. Recai Günesdogdu, |
| Launch Date | 27.02.2015 |
| Base Currency | USD |
| Universe Sector | Fixed Income – Emerging Markets |
| Benchmark | JPM GBI-EM Global Diversified Composite Unhedged USD |
| Domicile | Ireland |
| Fund | Monthly Factsheet | ||||
|---|---|---|---|---|---|
| Class I USD |
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For a full list of available share class documents including PRIIPs KIDs, please visit our fund documents page.
The lead share class fund literature is shown first in the above list. If any literature is not available in the above list for the share class you are invested in/interested in, please contact [email protected]
Nomura Funds Ireland plc is an open-ended investment company with variable capital, incorporated in Ireland on 13th April, 2006 under the Act with registration number 418598. The Fund has been authorised by the Central Bank as an UCITS pursuant to the UCITS Regulations. The Fund is structured as an umbrella fund consisting of different Sub-Funds each comprising one or more Classes. The Fund has segregated liability between each of its Sub-Funds.
Full information on the presented funds, which is relevant for an investment decision, can be found in the fund´s most recent sales prospectus, key information document (PRIIPs KID), key investor information document (UCITS KIID) – as appropriate for your relevant jurisdiction – and annual and semi-annual reports. The UCITS KIIDs are available in English and, for the PRIIPs KIDs, in the official language of the countries in which the fund is registered for distribution.
OECD Governments (provided the relevant issues are investment grade), Government of Singapore, Government of the People’s Republic of China, Government of Brazil (provided the issues are of investment grade), Government of India provided the issues are of investment grade), European Investment Bank, European Bank for Reconstruction and Development, International Finance Corporation, International Monetary Fund, Euratom, The Asian Development Bank, European Central Bank, Council of Europe, Eurofima, African Development Bank, International Bank for Reconstruction and Development (The World Bank), The Inter American Development Bank, European Union, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Government National Mortgage Association (Ginnie Mae), Student Loan Marketing Association (Sallie Mae), Federal Home Loan Bank, Federal Farm Credit Bank, Tennessee Valley Authority.
Performance in the past is no guarantee of future success. There can be no guarantee that the fund´s investment objective will actually be achieved.
A summary of investor rights in English and information on collective redress mechanisms are available at https://www.nomura-asset.co.uk/download/funds/how-to-invest/Summary_of_investor_rights.pdf . Nomura Asset Management U.K. Limited may at any time decide to terminate arrangements it may have made for the marketing of units of a fund in a member state other than its home member state.
Investing in emerging markets is considered speculative and involves risks and considerations not typically associated with other more established economies or securities markets, including, but not limited to, greater price volatility, substantially less liquidity, significantly smaller securities market capitalization, social and political instability and limited regulation. Investment in sovereign debt includes the risk that the governmental entity that controls its repayment may not be able or willing to repay the principal and / or interest due to economic and or political constraints. Investment in high yield securities generally entails increased interest rate, credit, liquidity and market risk. Investment in non-investment grade securities may subject the fund to heightened litigation risks and / or prevent their disposal.
