Schroders is launching an ISF global high-income bond fund, investing in a blend of emerging market sovereigns and corporates and developed world high-yield bonds.
Global bond fund manager Warren Hyland will run the fund, supported by the group’s fixed-income team.
He will actively allocate assets between the three broad high-yield fixed-income sectors as well as actively managing currencies. Through a mixture of quantitative and qualitative analysis, Hyland will seek high income together with diversification benefits.
Schroders says emerging market corporate bonds have become a significant and popular asset class, driven by lower levels of leverage compared with the developed world.
But GLG Partners recently warned that dollar-denominated emerging market debt is in a bubble.
It also observed the majority of local currency emerging market currency debt derives its returns from the local currencies themselves.
The Brazilian government points out that these currencies may in some cases be overheating in the midst of an international “currency war”.