Ashmore Group launches Emerging Markets Frontier Blended Debt Fund
17 December 2024
Ashmore Group, the specialist Emerging Markets asset manager that manages US$51.8 billion (as at 30 September 2024), announces the launch of its SICAV Emerging Markets Frontier Blended Debt Fund (“the Fund”).
The Fund, which is a sub-fund of the Luxembourg-domiciled Ashmore SICAV UCITS Fund, aims to maximise total returns by investing in transferable debt securities issued primarily by sovereign issuers within Frontier Emerging Markets. The Fund will invest in Hard Currency, Local Currency debt and Foreign Exchange instruments.
The investment opportunity
The Fund offers investors the opportunity to capitalise on the attractive yields and improving credit stories offered by Frontier EM debt markets. The Fund provides the following benefits:
- Attractive all-in yields: investors can hope to achieve higher returns due to the elevated risk premia associated with Frontier markets.
- Participation in improving credits and economic turnaround stories: the Fund allows investors to participate in the economic recovery and a net improvement in credit ratings within Frontier Markets.
- Low average duration: the shorter durations typically associated with Frontier debt offer reduced exposure to interest rate volatility.
- High carry opportunities in select local currency instruments: investors can benefit from the high yield available in local currency instruments within Frontier markets.
Alexis de Mones, Portfolio Manager at Ashmore Group, commented: “Lower foreign investor participation in EM Frontier debt markets has led to an increase in borrowing costs across many of these markets, and this Fund provides investors with access to the high-yield opportunities that we are seeing as a result. Our extensive experience and deep relationships in these countries position us very well to capitalise on the attractive risk premia and economic turnaround stories that these markets offer. The hard and local currency Frontier markets offer very distinct returns profiles over different parts of the cycle, and this will provide us with opportunities to manage the fund actively and reduce the level of volatility.”
Market Context
The landscape of Emerging Markets (EM) sovereign debt continues to evolve, with an increasing divergence between a narrow spectrum of high quality, high liquidity debt markets and a broader array of smaller markets, many of which are classified as 'Frontier' debt markets.
The financial pressure faced by many Frontier markets in the aftermath of the pandemic led to a loss of market access and a significant reduction in capital inflows from international private investors.
However, the increased involvement of the International Monetary Fund (IMF) has catalysed economic reforms, reduced imbalances and led to an overall improvement in sovereign credit ratings across the Frontier debt space. Despite these positive developments, lower foreign investor participation still result in high borrowing costs in many of these markets, creating compelling investment opportunities with potential double-digit yields – the Fund’s yield to maturity is over 11% today.
Ashmore's expertise in Frontier Market Debt
With over 30 years of experience in managing EM debt, Ashmore is very well positioned to navigate the complexities of Frontier Markets. With a global footprint and ten local offices, the firm’s extensive relationships with policymakers, local banks and businesses provide valuable insights and opportunities for debt investments in Frontier markets.
Ashmore already manages close to USD 3bn in Frontier debt assets across existing EM debt strategies, and has been managing a dedicated Frontier Equities strategy successfully since 2010 (Fund gross returns 8.1% p.a. vs. index return of 4.2% p.a.). The launch of a dedicated Frontier debt product complements Ashmore’s product range of specialist strategies offering lower correlation and more attractive valuation than traditional global debt or equity products.
ENDS
Notes to Editors
About Ashmore
Ashmore is a specialist Emerging Markets investment manager that has successfully managed its clients’ capital for more than 30 years. The business was founded as part of ANZ in 1992, became independent in 1999 and listed on the London Stock Exchange in 2006. As of 30 September 2024, it manages $51.8 billion which is diversified by investment theme and by client. It is headquartered in London and has a network of 10 local offices, in Colombia, India, Indonesia, Ireland, Japan, Peru, Saudi Arabia, Singapore, the UAE and the United States of America.
Contact details
Cardew Group
+44 207 766 1212
Henry Crane
+44 7918 207157
Luke Bramwell
+44 7467 992924