Vontobel launches fixed maturity emerging market bond fund
Vontobel is expanding its suite of emerging market bond products with a fixed maturity fund, responding to investors demand for income with a predictable credit and duration risk trajectory.
The Vontobel Fund II - Fixed Maturity Emerging Markets Corporate Bond 2026 invests mainly in short and mid-maturity emerging market corporate bonds. The fund has a fixed maturity of five years aiming for an average investment-grade rating and a target yield to maturity of 4.7 per cent.
Building on several years of experience in fixed maturity bond management, Vontobel's emerging market fixed income team manages the fund, supported by ESG analysts. The fund focuses on optimising the level of spread for a given level of risk. Using in-depth research and a proprietary valuation model, the team compares the risk vs. return potential across issuer qualities, countries, interest rates, currencies and maturities within their investment universe to identify the most rewarding opportunities. The fund excludes a range of sectors due to ESG concerns and is designated Article 6 based on the SFDR classification.
“With a predetermined maturity date, the fund’s volatility, credit and duration risk reduces over time,” says Sergey Goncharov, Portfolio Manager. “This allows investors to participate in emerging markets' above-average yield opportunities with diminishing risks over the fund's life span, with the prospect of capital repayment at a fixed date.”
“In an ongoing low rate environment, clients seek solutions that can meet the need for a higher yield, without taking on unnecessary risk. The launch of this fund demonstrates our ongoing commitment to leveraging our proven emerging market fixed income expertise to construct innovative solutions that meet the evolving needs of our clients,” says Rémi Casals, Global Head of Fixed Income Business.