Emerging Market Debt Relative

The EMD team, headed by Abdallah Guezour, consists of deep and highly experienced management teams in multiple time zones, drawing on the expertise of more than 30 credit analysts across five continents, with in-market presence in six major emerging countries.

Abdallah Guezour

Abdallah Guezour is the Head of the EMD team. He joined Schroders in 2000 and is based in London. Abdallah is responsible for the fundamental research of Asian countries. He also developed the Quantitative Country Risk and the Valuation Models used by the team. His investment career commenced when he joined Fortis Investment Management in Paris as an Emerging Market Debt Fund Manager.

Abdallah Guezour

Abdallah Guezour is the Head of the EMD team. He joined Schroders in 2000 and is based in London. Abdallah is responsible for the fundamental research of Asian countries. He also developed the Quantitative Country Risk and the Valuation Models used by the team. His investment career commenced when he joined Fortis Investment Management in Paris as an Emerging Market Debt Fund Manager.

Fernando Grisales

Fernando Grisales joined Schroders in April 2012 and is a Senior Portfolio Manager in the EMD team. He had previously worked at ICE Canyon as a Senior Portfolio Manager for two years. From 2001-2010, he worked at AllianceBernstein in a variety of roles.

Fernando Grisales

Fernando Grisales joined Schroders in April 2012 and is a Senior Portfolio Manager in the EMD team. He had previously worked at ICE Canyon as a Senior Portfolio Manager for two years. From 2001-2010, he worked at AllianceBernstein in a variety of roles.

Autumn Graham

Autumn Graham is a Portfolio Manager at Schroders, with a specialization in Emerging Market corporate bonds. She joined Schroders in 2017 and is based in New York. Before joining Schroders, Autumn was a Director at GIA Partners, conducting credit research and portfolio allocation of Emerging Markets and Developed Markets corporate bonds. She covered Emerging Markets corporates and debt restructurings at ICE Canyon as an investment analyst and began her career as a publishing research analyst covering Latin American corporates at Barclays Capital.

Autumn Graham

Autumn Graham is a Portfolio Manager at Schroders, with a specialization in Emerging Market corporate bonds. She joined Schroders in 2017 and is based in New York. Before joining Schroders, Autumn was a Director at GIA Partners, conducting credit research and portfolio allocation of Emerging Markets and Developed Markets corporate bonds. She covered Emerging Markets corporates and debt restructurings at ICE Canyon as an investment analyst and began her career as a publishing research analyst covering Latin American corporates at Barclays Capital.

We believe that value exists across the EMD opportunity set in every market cycle and episode of structural change and can be identified through fundamental research and time-tested investment tools. We advocate an integrated, dynamic asset allocation approach utilizing the entire EMD opportunity set as the best way to balance risk and return and optimize exposure to this asset class.  Our relative value approach seeks to best harness the four main sources of potential excess return in EMD: hard currency sovereign, hard currency corporate, and local rates and currencies – in a dynamic, integrated format that minimizes unintended risks.

Our approach begins with a top-down view that takes into account a wide variety of information from both external and internal sources. These sources include:

• Primary research by our EMD team
• Output from our proprietary models. These include our Sovereign Credit Model and country scorecards
• Street research
• Intuition from our Quarterly Investment Forum, the session where all Schroders fixed income professionals weigh in on market valuations and drivers for the next three to six months
• Input from areas of the global Schroders investment platform, including insight from our global fixed income “crossover” investors, and observations on country attractiveness from our EM equity team.

Global conditions for EMD are discussed quarterly; a broad investment framework covering major themes in the market is then created encompassing the following:

• Global and regional outlooks (Asia, Eastern Europe, Latin America, Middle East/Africa);
• Long-term sovereign and currency risk models (quantitative analysis);
• Long-term chart analysis (technical analysis); and
• Global and regional sentiment (sentiment analysis).

Country analysis is carried out weekly and forms the core of the investment process. Our investment universe comprises more than 50 countries. Major countries are reviewed at least once a year, minor ones less frequently. Four types of analysis are applied to each country. Countries are compared consistently (a) over time and (b) against each other. The EMD team’s comprehensive country analysis employs four separate and independent levels of analysis: fundamental, quantitative, technical and sentiment. Fundamental analysis is the most important element. The quantitative, technical and sentiment analyses are used to support our fundamental views.

Fundamental analysis (biggest contribution to decision making – 70%)

The relevant country analyst prepares a report on a particular country, which focuses on political, economic and market developments and outlook. Such a report frequently follows a country research visit. Politics is inevitably the most qualitative element and focuses on risks and opportunities. Economic outlooks, as well as market forecasts for external and local debt and for the exchange rate, are also prepared. These forecasts are made on both a three and 12-month horizon and are the central output of this analysis.

EMD fund managers make frequent visits to the countries within their respective regions. They meet with figures such as policy makers, central banks, consultants, local banks, journalists and company executives. In the course of this research, they also draw on the expertise of Schroders' local equity and credit analysts. Schroders’ presence in 28 countries around the world is a significant support for this activity and ensures, at the very least, that we gain access to key decision makers, particularly during times of crisis.

Quantitative analysis

A country risk model is updated for all countries in our investment universe at the start of each quarter and whenever an individual country is reviewed. The model aims to provide an objective input into our inevitably more subjective fundamental analysis. Countries are scored on a scale from -12 to +12 reflecting the country’s risk based on six key factors: Growth dynamics, sovereign external liquidity, hot money indicator, domestic banking system: external liquidity, credit cycle and competitiveness. 

Technical analysis

We make extensive use of chart analysis: the volatile and frequently momentum-driven nature of many EMs makes both long- and short-term chart analyses of price patterns a valuable tool. Chart analysis encompasses:

Source: Schroders.

Chart analysis is particularly useful in supporting decisions on timing and aggressiveness of positioning. Chart analysis also often generates investment ideas which are then fully researched through fundamental analysis.

Sentiment analysis

Sentiment analysis attempts to discover how other market participants are positioned and/or how likely they are to change their positions in the future. Accurate readings can support our own assessment of risk/opportunity in markets. A few key measures are systematically considered as contrarian indicators. The sentiment indicators include: consensus forecast model, fund manager risk index, short term sentiment index STSI, flow analysis, ratings agency.

At the final stage of the analysis, the EMD team agrees 12-month total return forecasts for each investable asset. Given the risks involved, a minimum expected return of 8% (in USD) is required to initiate a position. Assuming such returns are forecast, investments are made subject to the team’s portfolio construction discipline.

In order to aid investment decision making, the team maintain a scorecard for all countries and their respective markets in our universe, thus enabling the team to rank opportunities based on the output from our investment process.

• The strategy uses an integrated approach to the main sectors of EM fixed income, insuring that portfolio risks are assessed in the most comprehensive manner
• The strategy is less benchmark-constrained than typical hard currency sovereign-based strategies, which provides the flexibility to pursue the most attractive investment opportunities available
• A comprehensive and proven investment process that uses four types of analysis: fundamental, quantitative, technical and sentiment, in assessing investment opportunities

Strategy Overview

The Mirage of Emerging Market Debt ETFs Whitepaper

Local currency investing in emerging markets: How much is enough? 

• Subadvised Mutual Fund
• Separate Accounts