Emerging Markets Corporate Debt Strategy
Emerging Markets Corporate Debt Strategy

Emerging Markets Corporate Debt Strategy

 
 
 
Summary

The Emerging Markets Corporate Debt Strategy is a value-oriented fixed income strategy that seeks to maximize total return from income and price appreciation by primarily investing across the credit spectrum in the debt securities of emerging market corporate issuers. Investments are mostly denominated in U.S. currency, and include non-U.S. and/or local currencies. To help achieve its objective, the team follows a disciplined investment process that combines top-down country allocation with bottom-up credit analysis to identify undervalued Emerging Markets Corporate Debt securities.

 

1.5-2.5%
Expected Tracking Error
5-5.5 years
Typical Duration
5.5-6.5%
Typical Yield to Maturity
 
 
Investment Approach
Philosophy

The team generally looks to take advantage of investment opportunities across corporate, quasi-sovereign and to a lesser extent sovereign debt securities from Emerging Markets countries experiencing positive fundamental change. EM Corporate Debt seeks to provide investors the opportunity to capitalize on this progress as local companies become leaders in their domestic markets and relevant in the global credit arena. 

The team aims to capture the upside potential of Emerging Market Corporate Debt securities through:

  • Country and Security Analysis
  • Value Orientation
  • Credit Analysis

 

 
Differentiators
Global presence

The team is supported by Morgan Stanley’s presence in nearly every major financial market and region, drawing on the scale and scope of the firm’s global franchise to help manage risks and identify opportunities throughout market cycles.

Experience and complementary skill set

The team is comprised of investment professionals with complementary skills sets, which facilitate informed, well-researched investment decisions. Morgan Stanley Investment Management has managed dedicated EMD assets since 1993, with the Head of the EMD effort being involved since 1997.

Morgan Stanley Investment Management's structure

The firm’s structure allows for entrepreneurial flexibility, equipping the investment team with the liberty to respond quickly to market developments and swiftly implement investment ideas.

 
 
 
Investment Process
1
Macro analysis

The team begins with a top-down analysis of the global macro environment, its impact on EM, and the market’s appetite for risk. The output of the analysis is an overall risk target for all of our portfolios relative to their respective benchmarks.

2
Sovereign analysis

The team’s objective is to analyze credit opportunities in countries identified as those exhibiting positive rates of change using frameworks that meld economic, political, and social assessments. In this process the team extends its analysis to determine how these factors may positively influence the overall business environment and support the credit worthiness of companies.

3
Credit analysis and industry outlook

The team reviews a variety of metrics to evaluate the credit worthiness of specific issuers taking into consideration the team’s sovereign views and additionally, the industry outlook for each issuer.

4
Security selection and portfolio construction

The team’s models provide perspective on market valuations in different cycles and time periods, enabling them to identify potential mispricing and alpha opportunities. Each potential security is analyzed through a variety of credit and valuation metrics. The team uses a Positioning & Sizing framework that takes into consideration the total return potential of investment alternatives, the volatility of returns and correlation of such potential positions to assess risk, and a conviction factor about the return/risk trade-off based on a comprehensive review of event risk (including near-term political factors) and the market technicals such as planned issuance, investors’ positioning, and outlook for asset class flows.

5
Risk management

Risk management is integrated throughout the team’s investment process. An independent team also monitors portfolio adherence to guidelines, overall risk levels, and composition.

 
 
Portfolio Managers
Managing Director
23 years industry experience
Managing Director
24 years industry experience
Executive Director
14 years industry experience
 
 
Insights
Global Fixed Income Insights
Emerging Markets: Don't Judge a Book by its Aggregates
May 21, 2018
The Emerging Markets Debt Team addresses some of economist Carmen Reinhart's recent statements as well as other popular misconceptions about emerging markets.
Macro Insight
How We’re Adapting to the Changing Markets
Aug 29, 2018
Eric Baurmeister, Head of the EMD Team, discusses the changing state of the emerging markets, opportunities he sees going forward and how his team is built to adapt to these changes.
Global Fixed Income Bulletin
The Macro Trends Which Matter
Aug 15, 2018
The Global Fixed Income team discusses that there comes a time when valuations get stretched too far and how volatility may be poised to pick up.
 
 
 
 

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リスクについて

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