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ashmail [at] ashmoregroup [dot] com (Email Ashmore)
Fixed income investment process
The Investment Committee collectively manages all portfolios and meets formally on a weekly basis to review markets, determine our investment strategy, and manage portfolios. In addition, interim meetings may be held depending on market conditions. The formal meetings and the collective decision making ensure information sharing and fosters discipline in executing investment strategies. This combines with the flexibility to respond to new information that comes from being a specialist firm with the investment professionals all working in close proximity in the same office.
We have a specialist, long-term value-driven approach starting with macro, top-down active management. We believe that active management focusing on asset liquidity and political dynamics with superior information and analysis leads to above average returns with lower risk over the cycle.
Macro top down
- Forward looking analysis of global and local macro-economics, politics, interest rate and currency dynamics
- Analysis of the drivers of market prices
- Scenario planning
- Analysis of credit risk of the assets: Ability to pay (quantitative analysis) plus Willingness to pay (local politics)
- Bottom-up credit analysis complements macro analysis
- Scenario planning
- Look for divergence between market prices and credit risk
- Tolerance for mark-to-market volatility
- In-house research, integrated in portfolio management team
- Collective, team-based approach and institutionalised investment process, unchanged since 1992
- Focus on exploiting the structural changes in Emerging Market instruments
- Investment life cycle — analysis, execution, management and exit
- Robust risk management culture
- Liquidity integral to every investment decision
- Liquidity embedded in portfolio construction
The Investment Team works collectively as a unit, with Portfolio Managers having primary and secondary product and geographical responsibilities. Within Ashmore’s integrated investment process, Portfolio Managers conduct their own research, relevant to their product and regional focus and generally execute their own trades. The team members travel extensively, undertaking both macro and in-country research. They are supported by other team members who share their macro views as well as their local market insights. In addition, the team makes strong use of Ashmore’s network of contacts that have been established after over more than 20 years’ involvement in Emerging Markets. This network includes local institutional investors such as banks and major institutional investors, multi-lateral agencies and bank counterparty relationships and contacts across all levels of the policy-making hierarchy.
We believe that the best way to gain exposure to strong medium and long-term trends in Emerging Markets is to employ specialist managers using an active approach.
Our Portfolio Managers have the technical skills and an understanding of the asset class gained over many years of experience, which fits in well with our rigorous and proven investment approach.
This approach combines the formal investment discipline of an Investment Committee with a degree of flexibility to respond to changing events in the time-scale in which market fundamentals change. In Emerging Markets, these fundamentals can often change rapidly, which is why we believe that active management with a heavy implementation bias towards high liquidity is often most appropriate.
Please note that there is no guarantee that Funds managed under this theme/approach will achieve its objectives or that the strategy (risk management or otherwise) will be successful.