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The ERSTE BOND EMERGING MARKETS CORPORATE fund celebrates its 10th anniversary. “Since our start in this asset class, the universe of emerging markets corporate bonds has matured noticeably,” says Péter Varga, Senior Professional Fund Manager, Emerging Market Corporates with Erste AM. The expert is convinced that in the future, bonds from companies based in emerging markets (i.e. emerging markets corporate bonds) might even play a bigger role.



“We were one of the pioneering asset managers in this asset class back in the days, but meanwhile the market has quintupled in size. At a volume of USD 1.7 trillion, it almost matches the US high-yield market today.”

Péter Varga, Senior Professional Fund Manager Emerging Market Corporates with Erste AM

Emerging markets corporate bonds are an attractive asset class in particular for institutional investors with a longer investment horizon. “Companies based in the emerging markets are significantly less leveraged than companies from the developed world. The average credit rating is in a bandwidth of BBB- to BB+, i.e. at the threshold to the high-yield segment,” explains Varga. However, the aggregate debt load of all emerging markets companies is only half of that of US high-yield issuers. “For issuers, this means: similar yields as in the US high-yield segment at a much lower fundamental risk”, says the expert.

 

Since the launch of ERSTE BOND EMERGING MARKETS CORPORATE in 2007, Varga and his team have achieved an annualised performance of 6.35%. The fund management team has received numerous awards due to this track record, one of which was a Morningstar rating of five out of five possible stars. Assets under management currently amount to EUR 439.95mn (as of 31 July 2017). The fund management team in charge manages about EUR 1.7bn worth of emerging markets corporate bonds (that includes mutual funds and institutional mandates).

Calculated according to the OeKB method. The performance data take into account the management fee, but do not take into account the one-off load of up to 3.5% due at the time of issue nor other costs that diminish performance such as account and depositary fees. Past performance is not indicative of the future development of the fund.

By means of cumulative returns, it can be seen that we have been able to generate an outperformance for our clients over nearly all investment periods. The basis for this accomplishment was the consistency in fund management and investment style as well as focus on risk management.

One of the compelling features of the fund is the focus on stability. The aim of the fund manager is to avoid losers and to implement a rather conservative investment approach in order to be able to offer a smooth performance path even in erratic markets. By taking a look at the past ten years, it goes to show that strategic, long-term investors benefited most from the management of downside risk. A look at some of the most recent significant market downturns shows that so far we did a good job in achieving this aim. As can be seen from these charts, the fund suffered less than the relevant investment universe during those downturns and also recovered significantly faster. Hence, even in difficult times a high level of stability can be sustained.

Calculated according to the OeKB method. The performance data take into account the management fee, but do not take into account the one-off load of up to 3.5% due at the time of issue nor other costs that diminish performance such as account and depositary fees. Past performance is not indicative of the future development of the fund.

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Disclaimer

This document is an advertisement. All data is sourced from ERSTE-SPARINVEST Kapitalanlagegesellschaft m.b.H. and Erste Asset Management GmbH unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by ERSTE-SPARINVEST Kapitalanlagegesellschaft m.b.H. and Erste Asset Management GmbH, pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the  web site www.erste-am.com or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) or the Information for Investors pursuant to § 21 AIFMG, especially the risk notices it or they contain, before making an investment decision.

Please consult the corresponding information in the prospectus or Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of fund shares to American citizens. Misprints and errors excepted.