Claudia Calich has been managing the M&G Emerging Markets Bond fund since 2013. She believes that choosing the right mix between government and corporate issues in local and hard currency, together with careful country and security selection, are key factors in seeking to maximise returns. With this fund, which currently yields around 5.5% and pays income half-yearly, Calich and her deputy, Charles De Quinsonas, can take a flexible approach. This means they can allocate the portfolio in an unrestricted way between the four main emerging market bond sub-asset classes – government debt and corporate bonds issued in both local and hard currency. 

Calich’s macroeconomic assessment begins with the global economic and market outlook, as well as the overall risk profile of the different economies. Liquidity, solvency, balance of payments and political factors are among the key considerations for emerging market government bonds, while their company analysis includes ownership structure, business risk and financial risk.

Calich’s investment thesis favors the freedom to invest in emerging market corporate as well as government bonds, which should provide greater opportunities compared with funds restricted to the much smaller number of emerging market government issuers.

October 2020