Threadneedle emerging market corporate bonds strategy

Threadneedle, who has a total AUM of £8bn in emerging markets, has launched a new investment strategy via the Threadneedle (Lux) Emerging Market Corporate Bonds Fund.

The fund aims to achieve a total return from income and capital appreciation from/by investing principally in debt issued by emerging market companies as well as companies that conduct a significant part of their business in emerging markets.  Threadneedle, known for its expertise in managing emerging market sovereign debt, aims to combine this skill set with the expertise of its high yield and investment grade credit teams to exploit opportunities in the emerging market corporate sector.

Richard House, Head of Emerging Market Debt at Threadneedle, comments: "Emerging market fundamentals, particularly sovereign balance sheets, have never been stronger.  This has driven the structural reduction of the risk premium associated with investing in external sovereign debt.  This trend seems set to continue. As emerging market economies mature, the corporate bond market will develop further in order to finance the growing domestic consumer base. The emerging market corporate debt market is likely to grow significantly over the next few years and offers a significant yield pick up over sovereign debt.  This combination of strong underlying emerging market fundamentals with a high yield makes emerging market corporate bonds an attractive risk adjusted investment opportunity."

The growth potential of emerging economies is much greater than that of countries in the developed world.  Consumer debt levels in most emerging economies are low, whereas concerns are rising that high levels of indebtedness in the developed world could drag down the growth of advanced economies for some time to come.

Countries in the emerging world are also investing heavily in infrastructure and technology, allowing them to improve productivity, which is a key driver of economic growth. It also helps emerging market companies to compete ever more effectively against established global firms.  So as companies take on debt to expand and grow, this presents investors with increased opportunities.

The fund will be a joint venture between Threadneedle's highly regarded emerging market, investment grade and high yield credit teams, as well as other specialists across our comprehensive fixed income range with a total of £19bn assets under management.