BlueBay Emerging Market Unconstrained Bond
A unique high conviction fund which offers investors access to BlueBay’s best ideas across the Emerging Market debt universe. The fund is flexible and will invest in both hard and local currency debt and sovereign and corporate EM debt, depending on the best opportunities. The fund can also short or bet against a sovereign, corporate or currency where it has a strong view.
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Fund Managers
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Polina is Co-Head of Emerging Market Debt at BlueBay and the lead portfolio manager for the firm's long-only and alternative emerging market corporate bond portfolios. She joined BlueBay in July 2005, coming from UBS, where she worked as a credit analyst in EMEA corporate research. Before that, Polina was with Alliance Capital, where she began as an emerging markets equity analyst and later pioneered emerging markets quantitative research. She holds an MSc (Hons) in Finance from the Peoples’ Friendship University of Russia, Moscow, and is a CFA Charterholder.
Anthony is a Senior Portfolio Manager within the Emerging Markets Team at BlueBay. He joined the firm in March 2006, where he manages the EM long-short credit strategy, the EM Unconstrained Bond Fund, and a suite of EM Corporate long-only funds. Before joining BlueBay, Anthony held a management position at National Australia Bank. He holds a Bachelor of Commerce degree from the University of Melbourne, a Graduate Diploma in Applied Finance and Investment from the Australian Securities and Investments Commission, and is a CFA charterholder.
Polina is Co-Head of Emerging Market Debt at BlueBay and the lead portfolio manager for the firm's long-only and alternative emerging market corporate bond portfolios. She joined BlueBay in July 2005, coming from UBS, where she worked as a credit analyst in EMEA corporate research. Before that, Polina was with Alliance Capital, where she began as an emerging markets equity analyst and later pioneered emerging markets quantitative research. She holds an MSc (Hons) in Finance from the Peoples’ Friendship University of Russia, Moscow, and is a CFA Charterholder.
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Company Description
BlueBay is part of RBC Global Asset Management. The asset management division of the Royal Bank of Canada. BlueBay are a specialist fixed income manager and manage $108bn of assets. BlueBay is a global company with a presence on the ground in many markets around the world including the UK, Australia, China, Japan and the USA. They employ 135 investment professionals and manage 49 specialist strategies.
Fund Performance
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Investment process
The BlueBay fixed income philosophy is grounded in a belief that markets are inefficient and can be exploited. The firm’s investment approach is consistent across their products. There are three pillars to the research process: macro, credit and responsible investment.
The process relies heavily on a wide team of well-resourced investment specialists, with a forensic approach to research. The team has an average of 17 years’ experience. It is split between sovereign and corporate specialists. This fund has a target of cash plus 4-6%. As the fund name suggests, this product is a high conviction portfolio with the flexibility to invest across the EM debt spectrum - ranging from hard to local currency and sovereign to corporate debt, depending on the teams view. The fund does not reference any benchmark.
Outperformance comes from four different sources. The most important of these is sovereign/corporate credit, but it also includes local currency rates, currency and term structure. These components are then broken down even further into granular alpha sources which are all independently analysed by members of the team.
Analysis begins with fundamental scoring for an individual country. This will include a broad analysis of the country’s financial position, incorporating macro and fundamental factors. This leads to a score from -3 to +3. An ESG and political analysis is also incorporated into this framework. These factors are particularly important in emerging markets. The political backdrop is often critical.
Finally, it is backed up by a subjective analysis and significant on the ground due diligence. The team will visit, sovereigns, regulators, opposition parties, non-government organisations and corporates to build up a picture and create a ‘mosaic theory’ approach to their research. The total research is combined to come up with an overall conviction score ranging from -3 to +3. This is a very high conviction fund and they are not afraid to take short positions if they think it will add alpha. The team can take negative views on FX, credit or duration.
Risk
As the name suggests, this fund has freedom and flexibility. The fund is benchmark agnostic. Positioning to particular geographies is likely to change significantly overtime. The fund has been quite volatile and has been subject to the occasional sharp drawdown, although these have generally been quite short and the fund has usually bounced back well.
The fund has tight risk controls in place. Each position has a nominal stop loss. If that is hit, it triggers a review of the position and the stop loss can be moved. If it is hit again, it triggers a mandatory halving of the position.
ESG
ESG - Integrated
BlueBay has been a member of the PRI (Principles for Responsible Investment) since 2013. ESG is incorporated into BlueBay’s process. The fund was reclassified from SFDR Article 6 to 8 from 1 April 2022. The fund now excludes controversial weapons, tobacco, thermal coal mining, oil sands and controversial jurisdictions. BlueBay has a unique ESG evaluation framework which combines internal and third party ESG data. The ESG analysis leads to two distinct ESG scores. A fundamental ESG risk rating (a scale from very high risk to very low risk) and an investment ESG score (which ranges from -3 to +3).
The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.