Talking factsheet: Emerging market debt strategy

Alejandro Arevalo and Reza Karim give an overview of Jupiter’s emerging market debt strategy, how the investment process works, and how the team seek to generate alpha.

Jupiter Global Emerging Markets Short Duration Bond

The Jupiter Global Emerging Markets Short Duration Bond fund is a ‘go anywhere’ short duration bond strategy, designed for any point in the cycle. It is a great way for investors to gain exposure to the yield premium offered by EMD, while also limiting volatility and drawdowns.


Flexibility: The fund can invest in both sovereign and corporate bonds, giving it the flexibility to look for value across the whole EMD spectrum.


Limited volatility: The team’s risk aware approach and focus on limiting downside has helped to limit what could have been much larger drawdowns, and it has put the fund in a strong position relative to many of its peers.


Limited duration and credit risk: The fund’s average effective duration will not exceed three years, and we never use derivatives to manage duration – the fund’s duration is simply the average duration across all bonds held in the portfolio. In terms of credit risk, while the fund can invest in lower-rated bonds, its average credit rating will not fall below BB2.


Use of CDSs and local currency hedging: The team have the ability to add protection effectively through credit default swaps (CDSs) and hedges against local EM FX.

2 Fund manager restrictions, not fund restrictions.

Jupiter Global Emerging Markets Corporate Bond

Emerging market corporate bonds are an often-underappreciated part of the emerging market debt landscape for investors used to focusing on sovereign debt. In fact:


  • Corporates have had better risk-adjusted returns than sovereigns over the last decade
  • The corporate market is around twice the size of the sovereign market
  • The corporate index has a higher investment grade allocation than sovereign
  • EM credits pay a premium over developed market, which in many cases is not justified
  • The corporate market is incredibly diversified across sectors and geographies
  • EM credits almost always offer a higher spread than their sovereign equivalent for the same rating
Why Jupiter for Emerging Market Credit?

The Jupiter Global Emerging Markets Corporate Bond fund provides focused exposure to a highly diversified EM credit market, a key growth area over the next decade.


Focusing on identifying strong bottom-up stories: The team identify companies with strong fundamentals that are trading at attractive valuations.


Adopting an all-weather approach: The team seek to deliver a consistent yield through the market cycle to offer a core, long-term portfolio holding.


Being risk aware: The team use top-down macro insights to help reduce drawdown and ensure they are paid for the risk we take.