Fund Analysis: Vontobel Fund – Emerging Markets Corporate Bonds

The Vontobel Emerging Markets Corporate Bonds fund is a fund domiciled in Luxembourg, which invests mainly in corporate bonds of emerging countries and which in its investment process seeks to take advantage of the differences in valuations due to the inherent nature of this type of assets. This is done with a four-step investment process that combines a top down and bottom up review, including global interest rate risk and currency risk, concentrating instead on the credit component.

It is a Vontobel house fund that is more than eight years old (launched in 2015), whose investment team is led by Senior Portfolio Manager Dr. Wouter Van Overfelt, who also leads the house's entire Emerging Market Corporate Debt team, and Portfolio Manager Sergey Goncharov, from the Emerging Market Bonds team. The team also has at its disposal the full capabilities of the firm for company analysis. At the end of December 2022, the fund had more than $2 billion in assets under management and its benchmark is the J.P. Morgan CEMBI Broad Diversified index and is denominated in USD.

Performance of the Vontobel Emerging Markets Corporate Bonds fund

It is a fund with a good Track Record, it has a very good history, Vontobel is an Institutional house invested by the Pension Funds in Chile.

During 2022 it suffered like all assets in its class. Its beta over 1 stands out from the chart, which allows it to recover in times of market upturn, as it is doing this 2023, which in just one month has taken 230 basis points from the index.

Source: Monthly Statement Vontobel Fund - Emerging Markets Corporate Bond I, USD at the end of Dec 2022.

Calendar year performance, as can be seen in the chart above, is generally at above-expected levels for the asset class on average.

Source: Factsheet Vontobel Fund - Emerging Markets Corporate Bond I, USD as of January 31, 2023.

Reviewing the fund's risk and positioning indicators in the chart above, we see that it is very well positioned against the benchmark for the beginning of 2023 with market upside and risk appetite; a riskier credit component than its benchmark, and a yield above 21%, are supported with a positive information ratio, i.e. it adds alpha, it adds value.

Key ratios and indicators for Vontobel Emerging Markets Corporate Bonds

Source: www.rankia.com

It is a fund with Beta greater than 1 and with higher volatility than the benchmark, due to its choice in the risk mix and its bond-picking positioning. It is a good asset to play on the market upside in this asset class.

Source: Factsheet Vontobel Fund - Emerging Markets Corporate Bond I, USD as of January 31, 2023.

It is a fund with a lower credit quality than its benchmark, playing more on High Yield than Investment Grade, which makes it a good product to protect against rising rates, playing on Spread compression if the chosen credit has a good Balance sheet. It is a good product to bet on a risk-taking scenario in the asset class.

Largest Vontobel Emerging Markets Corporate Bonds Positions

Source: Factsheet Vontobel Fund - Emerging Markets Corporate Bond I, USD as of January 31, 2023.

Conclusions

Advantages

Disadvantages

The Vontobel Emerging Markets Corporate Bonds fund is a fund with a solid track record, an experienced team, and a house like Vontobel behind it.