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GAM Sustainable Local Emerging Bond

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GAM Sustainable Local Emerging Bond Fund draws upon the expertise of Paul McNamara and GAM’s highly-acclaimed Emerging Markets Debt Team, whose differentiated, conviction-driven approach to EM debt investing has been developed over 20 years. The team’s investment approach aims to create long-term financial returns by investing in a way which is sensitive to the impact our investment decisions may have on society and the environment. The fund combines a positive tilt towards sovereigns with higher ESG scores, as defined by the JP Morgan ESG GBI-EM GD Index, with the team’s proprietary investment process incorporating ESG factors for active allocation within the index tilts.

Active Thinking Video

In his latest video update, Paul McNamara discusses how factors in major developed markets have had a major influence on emerging market (EM) debt, how EM fundamentals differ from their developed peers and offers his outlook for the asset class.

I think a big reason for the selloff in bonds in the core markets is this idea that we've got a huge amount of debt and huge deficits going forward. Generally, balance sheets in emerging markets are in better shape. I think there's some scope for outperformance on the back of that.

Our Edge

Leading players in EM debt

The strategy is led by Paul McNamara, who has managed the GAM Local Emerging Bond Fund since launch in 2000, while the experienced team averages 18 years’ investment experience. An extensive background of navigating economic cycles of crisis and recovery in EM debt forms the foundation of the process.

Structured, disciplined and repeatable investment process

The team maintains an emphasis on pro-active risk management, crisis avoidance and maintaining liquidity at all times.

Long-standing and proven

The established LEBF investment process has incorporated ESG factors since inception for their impact on risk-adjusted returns. This proprietary approach has driven the selection of a wide range of off-benchmark, profitable positions.

Proprietary Crisis Cycle Filter (CCF) reflects ESG factors

The filter is designed to identify country-specific issues and includes factors considered to be the most reliable, leading indicators of financial crises, frequently precipitated by poor governance. The team uses this tool alongside daily monitoring of relevant political, economic, environmental, social and governance events and trends.

Investment Team

The highly experienced and stable Emerging Markets Debt team is led by Paul McNamara, who has managed GAM Local Emerging Bond Fund since launch in 2000. It also comprises Michael Biggs and Markus Heider, Investment Managers and Sujata Pradhan, Trader. The team ranks among the largest managers of local EM debt solutions globally.

The team’s extensive background of navigating economic cycles of crisis and recovery in emerging market debt forms the foundation of its investment process, while a collaborative working style means that each person contributes to both research and portfolio management.

The team actively leverages the extensive investment insights and capabilities of GAM’s broader global fixed income teams.

Our investment approach aims to create long-term financial returns for our clients, who benefit from an established process with a long-standing track record but view an ESG tilt as desirable.
Paul McNamara, Investment Director

Philosophy and Process

Investment Philosophy

We believe ESG issues are material to investment outcomes. The team’s investment approach aims to create long-term financial returns for clients by investing in a way that incorporates a clear positive ESG tilt. The team believes that sustainability is important to the financial outlook of countries and the fund is managed against an ESG benchmark to deliver a measurable increase in ESG scores.

The team’s thematic, macro-driven EM debt investment approach is founded on the conviction that global macroeconomic developments drive emerging markets. Global themes identified using this top-down approach determine country selection and portfolio construction. At a bottom-up level, the most fertile investment opportunities are in countries entering or exiting financial crises, and these are identified using the ‘Crisis Cycle Filter’.


The team’s process mirrors that of the long-running Local Emerging Bond Fund. Based on its assessment of developments in the ‘Big 3’ global economies (US, Europe and China), the team establishes 3-5 top-down global themes. This determines country selection, along with specific return and risk driver preferences. Given the team’s emphasis on crisis avoidance, country analysis is then performed using the ‘Crisis Cycle Filter’. This captures the interaction between core ESG factors and nine traditional macroeconomic variables considered to be the most reliable, early indicators of financial crises, such as falling FX reserves or rapidly rising inflation.

The fund is managed against the JP Morgan ESG GBI-EM GD Index. This well-established benchmark leverages research from both Sustainalytics and RepRisk to create five ESG-scoring bands. The bottom band is excluded and weighting adjusted towards the higher bands, resulting in a higher ESG score relative to the benchmark. These scores are based on third-party sources such as World Governance Indicators (WGI) Project delivered by the World Bank.

The portfolio typically results in active exposure towards 15-25 emerging and frontier markets, centred upon approximately 10 very liquid core markets. The portfolio comprises 100-150 bonds and FX forwards. Active risk management is key to decision making, with independent oversight by GAM’s risk teams.


Theme generation

  • Establish baseline scenarios for US, Europe and China
  • Develop 3-5 top down investment themes

Country analysis

  • Bottom-up research sharpens single country views
  • Identify crisis candidates based on macro fundamentals and ESG risks

Portfolio construction

  • Valuation, market technicals and country specifics refine views
  • High conviction portfolio of ~100 –150 single positions

Risk management

  • Active risk management at portfolio, macro, theme and single position level
  • Ongoing risk oversight by two independent teams

Reasons to Invest

ESG benchmark ensures a positive tilt towards sovereigns with higher ESG scores

The ESG benchmark adjusts country benchmark weightings based on their ESG scores, thereby tilting towards sovereigns performing better on key ESG metrics, including the Worldwide Governance Indicators, human rights abuses, labour standards and environmental practices.

Combines the advantages of active management within an ESG Index framework

Active positions around the benchmark are taken using the team’s long-standing investment process.

Positive outlook for the asset class

The asset class should benefit from relatively high starting yields, attractive valuations, sound EM balance of payments fundamentals and rising global growth.

Potential for larger returns and diversification

The benefits of emerging market sovereign bonds can provide overall portfolio benefit, however an active approach is crucial to safely navigate the breadth of the opportunity set.

Key Risks

Capital at risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Credit risk / debt securities

Bonds may be subject to significant fluctuations in value. Bonds are subject to credit risk and interest rate risk.

Interest Rate Risk

A rise or fall in interest rates causes fluctuations in the value of fixed income securities, which may result in a decline or an increase in the value of such investments.

Currency Risk

The value of investments in assets that are denominated in currencies other than the base currency will be affected by changes in the relevant exchange rates which may cause a decline.

Market Risk / Emerging Markets

Emerging markets will generally be subject to greater political, market, counterparty and operational risks.

Fund Information


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GAM Multibond – Sustainable Local Emerging Bond is a sub-fund of GAM Multibond, registered office at 25, Grand Rue, L-1661 Luxembourg, an umbrella investment company

Disclaimer: Past performance is not an indicator of future performance and current or future trends. The indications could be based on figures denominated in a currency that may be different from the currency of your residence country and therefore the return may increase or decrease as a result of currency fluctuations. Capital at risk: all financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. Any reference to a security is not a recommendation to buy or sell that security.