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.
Warren Hyland, a global bond fund manager, 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 seeks a high income outcome together with diversification benefits while seeking to minimise any permanent loss of capital.
According to Schroders, emerging market corporate bonds have become a significant and popular asset class, driven by lower levels of leverage compared to the developed world.
However, GLG Partners recently warned dollar-denominated emerging market debt was in a bubble.
It also observed the majority of local currency emerging market currency debt derives its returns from the local currencies themselves.
According to emerging market authorities, such as the Brazilian government, these currencies may in some case be overheating in the midst of an international “currency war”.