Lombard Odier Investment Managers’ (LOIM) has combined its Global and Emerging Fixed Income teams into a single unit and hired a market strategist.
Traditionally, the fund management industry has separated the management of developed and emerging bond portfolios. Developed managers were intently focused on understanding the economic growth and business cycle dynamics while emerging market managers focused their attention on the identification of idiosyncratic risk in each emerging market.
We think the rising correlations between bond market performance in emerging and developed markets, together with continuing low yields and the globalization of trade and financial markets, mean that it makes sense to combine the skills of our teams. Given the rapidly-changing dynamics between economies, organizations need to adapt and innovate. We believe this move does just that.
“Emerging market risks are increasingly driven by developed market cycles,” says Gregor MacIntosh, who leads the new Global & Emerging Fixed Income team. “You only have to think of the contagion from the US credit crunch and Europe’s sovereign debt problems. We feel that a division between developed and emerging markets no longer makes sense for investors.”
The team has also hired Salman Ahmed, a Strategist with nine years’ investment experience, most recently as Head of Global Macro at EDF Trading. Before that Mr. Ahmed spent three years at Goldman Sachs International as a Global Economist.
The combined team focuses on leveraging ideas and insights from the constantly changing factors that determine how the sovereign fixed income markets move. The objective is to give us broader sources of return and lower risk-taking correlation that, in turn, can let us better generate alpha for our clients.
Our approach to investing in this asset class applies a fundamental weight-driven beta allocation with the aim of offering investors conservative exposure to local emerging market bonds and currencies. This assesses long-term sustainability by taking into account issuers’ ability to repay their debt. LOIM offers global and emerging market bond investment strategies with the enlarged investment team which aims to capture more diversified and uncorrelated alpha opportunities.
Past performance is not necessarily a guide to the future.