While historically local currency debt had offered a higher yield relative to hard currency emerging market debt (EMD), for a higher degree of volatility, local currency yields are now lower than they once were. With this in mind, Jupiter has taken the decision to reposition this strategy, removing the requirement of the fund’s holdings to be denominated in local currencies and hence broadening the fund’s investment opportunity across the emerging market debt spectrum, providing greater flexibility for the fund to generate an attractive yield.
The Jupiter Emerging Market Debt Income Fund has been managed by Jupiter’s Emerging Market Debt team, led by Head of EMD, Alejandro Arevalo, since Jupiter’s acquisition of Merian Global Investors in June 2020. The team, which also includes Fund Manager Reza Karim, Credit Analysts Alejandro di Bernardo and Xuchen Zhang, and Investment Director Matthew Morgan, manages $857m3 of assets across the EMD spectrum. They believe that a focus on fundamental credit selection, diversification and liquidity are key to achieving superior risk-adjusted returns.
Alejandro Arevalo, Head of EMD, commented: “Emerging market debt offers a significant yield premium relative to developed markets. The breakthroughs we have seen with COVID-19 vaccines and their subsequent rollout is even more important for those EM countries that do not have the reserve currencies, deep pockets, and access to credit markets that developed markets enjoy. With yields squeezed across the globe and EMD spreads still playing catch up to developed market fixed income, we believe now is a good time to allocate to emerging markets.
“We believe these changes will help us to achieve a more attractive total return outcome for investors while also providing us with more flexibility to generate a competitive yield for the fund by allocating capital judiciously across the EMD spectrum.”
2 Previously the Merian Local Currency Emerging Market Debt Fund
3 Source, Jupiter as at 31.08.2021
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Notes to Editors
In addition to the fund’s repositioning, the portfolio’s permitted exposure to securities which are rated below Investment Grade will rise from 85% to 100% of the fund’s Net Asset Value (NAV). The fund’s benchmark will change to a composite made up of 65% J.P. Morgan Corporate Emerging Markets Bond Index (CEMBI) Broad Diversified and 35% J.P. Morgan Emerging Market Bond Index (EMBI) Global Diversified.
Jupiter is a specialist, high conviction, active asset manager committed to making a positive difference for our clients by helping them achieve their long-term investment objectives. From the origins in 1985, Jupiter now offers a range of actively managed strategies available to UK and international clients including equities, fixed income, multi-asset and alternatives. Jupiter is a constituent member of the FTSE 250 Index and has assets under management of £60.3bn /$83.4bn /€70.3 as at 30/06/21.
Independence of thought and individual accountability define Jupiter. The fund managers follow their convictions and seek those investment opportunities that they believe will ensure the best outcome for Jupiter’s clients. They do this through fundamental analysis and research, a clear investment process and risk management framework, with a focus on good stewardship.
Jupiter believes that asset managers have a critical leadership role to play in helping to resolve some of the greatest challenges facing the world. In this spirit, Jupiter is proud of the long-established credentials in the fields of ESG and sustainable investment, and the ongoing commitment to specialism and innovation in these areas. Jupiter is a constituent member of the FTSE4Good Index, and a signatory on a number of key initiatives such as the UN Principles for Responsible Investment.
Jupiter’s values and responsible business practices are aligned with the principles of the UN Global Compact and the 2020 UK Stewardship Code. Having engaged with the Financial Reporting Council (FRC) on the implementation of the 2020 UK Stewardship Code, Jupiter supports this reinvigorated framework and has undertaken further investor outreach with the FRC and the Investment Association (IA). Furthermore, Jupiter obtained the A+ score for strategy and governance in the latest assessment of activities under the Principles for Responsible Investment (PRI) and also maintained the ‘A’ status under the PRI principles for our equities strategies and improved our ranking to an ‘A’ in fixed income. Jupiter is a member of the Investor Forum (IF), the UK body which helps facilitate collective engagement with companies, with Jupiter’s Edward Bonham Carter on the Board of Directors. Jupiter Chief Executive Andrew Formica is a Board member of the IA and a member of the UK Government’s Asset Management Taskforce, which represents the interests of our industry in key decision-making forums.
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Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested.
The views expressed are those of the Fund Manager at the time of writing, are not necessarily those of Jupiter as a whole and may be subject to change. This is particularly true during periods of rapidly changing market circumstances.
Issued in the UK by Jupiter Asset Management Limited, registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier.
This communication provides information relating to Jupiter Emerging Market Debt Income Fund (the “Fund”), which is a sub-fund of Jupiter Asset Management Series plc. Jupiter Asset Management Series plc is an investment company with variable capital established as an umbrella fund with segregated liability between sub-funds which is authorised and regulated by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended. Registered in Ireland under registration number 271517. Registered office: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland. An investor should read the Key Investor Information Document(s) (“KIID”) before investing in the Fund. The KIID and the prospectus can be obtained from www.jupiteram.com in English and other required languages.