All investments involve risk. The value of your investment and the income from it will fluctuate and a loss of capital may occur.
A dedicated allocation to EM debt can offer investors much more than yield enhancement alone. Today, volatility has brought dispersion back to these markets, creating new opportunities to invest in assets at attractive valuations.
Importantly, EMs contribute 40% of the world economy, and a majority of the world’s carbon emissions1. Therefore, global sustainability efforts will require similar contributions and focus on EM.
The issue of sustainability, when viewed from an EM perspective, is multi-faceted and complex - that’s why within the EM Debt team we take a holistic view of sustainable investment. As corporate bond investors, our objective in promoting UN Sustainable Development Goals (SDGs) focuses on those goals for which corporate actions are measurable and the contributions can be meaningful; specifically, SDG 8, 9, 12, 13.
The UN’s Sustainable Development Goals (SDGs) were adopted by all United Nations member states in September 2015 as part of the organization’s 2030 Agenda for Sustainable Development and provide an established framework for best practices in sustainable investment. They provide a framework of 17 goals for countries and multinational organizations to pursue, ranging from ending poverty and hunger to taking climate action and protecting life on land and in the water.
Chris Perryman, Portfolio Manager, EM Fixed Income, explains how PineBridge GEM SDG Corporate Bond Fund promotes sustainability and issuer engagement through SDG-aligned investing in emerging markets.
SFDR Category 9 Fund with a sustainable investment objective
Stable investment team with one of the most established track records in the industry.
ESG data and reporting in compliance with SFDR requirements, including tracking of ESG engagement
The Sub-Fund is actively managed, seeking to deliver excess returns over the Sub-Fund ’s benchmark. The holdings may or may not be components of the benchmark and the Investment Manager has broad discretion to deviate from the benchmark securities, weightings and risk characteristics. The degree to which the Sub-Fund resembles the composition and risk characteristics of the benchmark is not a specifically targeted outcome and could vary over time, and the Sub-Fund ’s performance may be meaningfully different from the Sub-Fund ’s benchmark. The Investment Manager does not target a specific tracking error for the Sub-Fund but historically, tracking errors have ranged from 1-4%. This is subject to change at all times. Source of benchmark: JP Morgan. .
Since Inception to 28 November 2022 the Benchmark of the Sub-Fund was JP Morgan Corporate Emerging Markets Bond Index (CEMBI) Broad Diversified (Total Return).
Prior to 29 November 2022, the Sub-Fund was called PineBridge Global Emerging Markets Corporate Bond Fund, and its investment objective was ‘To achieve long term capital appreciation through investment in bonds issued primarily by corporate entities and financial institutions located in Emerging Markets. Such securities may be denominated in the local currency of any of the OECD member countries or the local currency of the emerging countries in which the Sub-Fund is permitted to invest as per investment guideline’. Consequently, all performance prior to 29 November 2022 was achieved on the basis of this investment objective.
Potential Investors should consider the following key risks before investing in the Sub-Fund:
Fixed Income Default Risk: The failure of an issuer or a counterparty to meet its payment obligations of a financial asset in the Sub-Fund will have a negative impact on the Sub-Fund.
Derivative Risk: A Sub-Fund may use derivative instruments for both efficient portfolio management and for investment purposes. Derivative transactions may be subject to significant volatility which may result in a loss greater than the principal amount invested.
Counterparty Risk: A Sub-Fund may have credit exposure (by virtue of position in swaps, repurchase agreements, FDI etc.) to its trading parties and may bear the risk of default of the counterparties.
Operational Risk: A Sub-Fund may risk loss resulting from process failures, inadequate procedures or controls.
Liquidity Risk: The risk that the Sub-Fund may invest some of their assets in illiquid securities and other illiquid financial instruments, in respect of which they may not always be possible to execute a buy or sell order at the desired price or to liquidate the open position.
Below Investment Grade Debt Securities Risk: Where Sub-Funds invest in securities rated below investment grade, also known as high yield securities, they may be subject to a greater credit, liquidity and market risk than investment grade debt securities.
Interest Rate Risk: Fixed income securities are typically interest rate sensitive, therefore changes in interest rates can result in positive or negative fluctuations in the value of the assets held by the Sub-Fund.
Currency Risk - Base Currency: Securities may be denominated in currencies different from the Sub-Fund's Base Currency and there is a risk that changes in exchange rates and exchange control regulations may cause the value of the assets expressed in the Base Currency to rise or fall.
Emerging Markets Risk: Emerging markets are typically smaller, less transparent, and subject to evolving, less stable political and regulatory regimes and securities from these markets may be more expensive to transact in, bear higher risk or have lower liquidity.
Counterparty Risk – Depositary and Sub-Custodians: Custody services in many emerging markets remain undeveloped and there is a transaction and custody risk of dealing in emerging market investments.
Investment in Russia Risk: Risks of investing in Russia arise from legislative change, from poor standards of corporate governance and investor protection and from regulatory change.
Risks Relating to China: Risks of investing in China arise from an uncertain taxation and political regime, restrictions on inward investment, dealing in closed currency and custody arrangements which are not to the same standard as those in developed markets.
Price Of Securities Risk: All types of investments and all markets and therefore the Fund and the Underlying Fund are at risk of market volatility based on prevailing economic conditions.
Concentration Risk: The Sub-Fund may invest in a limited number of securities compared to more diversified Sub-Funds or it may focus its investments and hold relatively large positions in, among other things, particular industries, countries, sectors, currencies or issuers. This may increase the volatility of the value of the Sub-Fund or for the Sub-Fund to bear losses and may also limit the liquidity of certain securities within the Sub-Fund.
ESG Risk: Risks associated with the environmental, social and governance variables, which could potentially affect the financial situation or operating performance of the Fund. These include sustainability risk, ESG Categorisation Risk and ESG Data.
The risk factors described above should not be considered an exhaustive list of risks, which potential investors should consider before investing in the Sub-Fund. For more details on the fund's potential risks please read the Prospectus and Key Investor Information Document at pinebridge.com/funds
Unless otherwise stated, all information is as of 31 December 2020 and sourced from PineBridge Investments internal data. PineBridge Global Emerging Markets Corporate Bond Fund (the "Fund") is a sub-fund of PineBridge Global Funds, an Irish domiciled UCITS umbrella fund, authorized and regulated by the Central Bank of Ireland. PineBridge Investments is a group of international companies that provide investment advice and market asset management products and services to clients around the world. PineBridge Investments is a registered trademark proprietary to PineBridge Investments IP Holding Company Limited.
This material does not constitute investment, financial, legal, tax, or other advice; investment research or a product of any research department; an offer to sell, or the solicitation of an offer to purchase any security or interest in a fund; or a recommendation for any investment product or strategy. PineBridge Investments is not soliciting or recommending any action based on information in this document. Any opinions, projections, or forward-looking statements expressed herein are solely those of the manager, may differ from the views or opinions expressed by other areas of PineBridge Investments, and are only for general informational purposes as of the date indicated. Views may be based on third-party data that has not been independently verified.
PineBridge Investments does not approve of or endorse any republication of this material. You are solely responsible for deciding whether any investment product or strategy is appropriate for you based upon your investment goals, financial situation and tolerance for risk. Investors should seek professional advice and refer to the PineBridge Global Fund’s Prospectus, the Key Investor Information Document (KIID), and the most recent financial statements, which include risk factors and terms and conditions and which should be read before investing, and may be obtained free of charge in Ireland from PineBridge Investments Ireland Limited, or any of its appointed distributors.
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