The Amundi Funds Emerging Markets Bond invests predominately in non-investment grade debt to maximize capital growth and income and has a track record of excellent performance. The strategy adopts a structured and repeatable investment process for bond investing in enabling separate teams of portfolio managers and fixed-income specialists to work cohesively together. Concepts are derived from general financial concepts, such as structural changes, economic cycles, institutional changes, and regulatory changes.
The investment process includes a list of securities approved by the Investment Committee and the Chief Investment Officer. Portfolio managers can only long or short securities on the approved list. The concept is generated from the bottom-up, such as the business model's in-depth study, economic moat, and potential investees' future cash flow.
The emerging markets debt team uses a six-stage investment process starting with a general macroeconomic review to develop critical concepts or themes such as structural changes, economic cycles, institutional changes, and regulatory changes. This process is narrowed down to investment targets where after rigorous analysis and formal peer review, a list of approved securities is created. Next, the chief portfolio manager will build model portfolios and retain control of the investment style and overall risk management.
According to cited examples, the fund outperformed during the March 2020 sell-off using active risk management by going long CDS protection on the index and single names attributed to +0.75% of performance primarily due to their long positions. Their long positions reached as high as 7% or +0.44% performance, while Its short position in oil futures reached as high as 1.5% resulting in an +0.28% performance.
The portfolio is benchmark-aware but is not benchmark agnostic. The strategy outperformed its peers by less than 1%. Still, in the past ten years, accumulative performance is around 189.176%, IRR=6.58%. When deducting a management fee of 1.35% and an administration fee of 0.2%, the net annual return was about 5.03%, vs. 3-year SD 14.06%, the performance is extraordinary.
This fund has been reviewed by three industry veterans of the Benchmark judging committee.