GAM Star Emerging Market Rates

GAM Star Emerging Market Rates is an unconstrained, high-conviction emerging markets (EM) debt strategy, seeking to capture 70% of market upside while avoiding 80% of the downside with less than half the underlying market risk. The strategy uses a macro-based approach to take long and short positions across interest rate, currency or credit markets and has consistently provided superior risk-adjusted returns across cycles, while mitigating downside risk.

Our Edge

Leading investors

Led by Paul McNamara, the long-standing, multi-award winning team of seasoned investment professionals ranks amongst the leading players in EM debt, both in terms of track records and assets.

Distinct investment style

The team has an extensive track record of value generation, thanks to their active, unconstrained, high-conviction management approach across EM debt asset classes and styles.

Multiple sources of alpha

The team seeks to optimise returns and mitigate drawdown risk by engaging across all principal dimensions of EM debt, from a long, short and relative value angle.

Liquidity profile

Implementation is distinctly focused on relatively liquid sovereign hard and local currency emerging market bonds and derivatives.

Investment Team

Led by Paul McNamara, the fund is managed by the exceptionally stable Emerging Markets Debt team. Since launch of the offshore fund in 2007 and the UCITS version in 2010, the team has consistently delivered on all investment targets.

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

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

We seek to add value by disagreeing with the market and being right

Philosophy and Process

Investment Philosophy

The team’s thematic, macro-driven approach is founded on the conviction that developed economies drive emerging market fundamentals, valuations and market technicals and that these global themes should drive country selection and portfolio architecture. At a bottom-up level, the team believes most alpha potential can be unlocked by gearing qualitative and quantitative country research towards identifying and quantifying idiosyncrasies and turning points in economic cycles. The resulting investment views, opportunity sets and positioning may materially deviate from any prevailing market consensus.

Investment Process

Unlike most EM investment processes, the team starts not by analysing emerging markets, but by establishing 3-5 “Big 3”(US, Europe and China) top-down global themes to determine country selection and specific return and risk driver preferences. Extensive bottom-up country research, combined with a proprietary ‘crisis filter’, tests these views and seeks to identify potential country inflection points. These are further refined by considering valuation, technical and country specifics. The process typically results in a medium-diversified portfolio of 30-40 liquid single positions which may represent directional (long or short) or non-directional (relative value) top-down macro or bottom-up country views. Active risk management forms an integral part of decision-making throughout the process, and is supported by independent oversight by GAM’s risk team.

Define market backdrop

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

Identify strong economic stories

‘Crisis filter’ tests views and flags potential country cycle inflection points
Bottom-up research sharpens single country views

Determine market valuations

A balance of high-conviction opportunities with risk hedges
Timing of entry and exit using technical analysis, identified catalysts and realisation timeframes

Portfolio construction and risk management

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

Reasons to Invest

Supportive fundamentals

EM trade and current account balances have rebounded recently and excess growth versus developed markets looks set to re-accelerate, in our view leading EM debt to deliver positive returns and outperform western bond markets.

Compelling valuations

Overall, EM interest rate, currency and credit markets remain cheap.

Relative value opportunities

Marked dislocations across the asset class have and continue to offer the potential for added value, for long only investors as well as embedded short or relative value strategies.

Higher market volatility

After an extended period of subdued volatility, financial markets are set for more normalised price action, offering additional opportunities at the tactical level, as well as putting downside risk mitigation back into focus.

Key Risks

Counterparty Risk / Derivatives

If a counterparty to a financial derivative contract were to default, the value of the contract, the cost to replace it and any cash or securities held by the counterparty to facilitate it, may be lost.

Leverage Risk

Derivatives may multiply the exposure to underlying assets and expose the Fund to the risk of substantial losses.

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.

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.

Our Thinking

Fund Information

CONTACT US

Contacts

Pour vos contacts locaux, veuillez sélectionner votre pays ou visitez notre page Contacts et Emplacements.

Mentions légales: Les performances passées ne sont pas un indicateur des performances futures ni des tendances actuelles ou futures. Les indications pourraient se fonder sur des chiffres libellés dans une devise pouvant différer de la devise de votre pays de résidence et le rendement peut de ce fait évoluer à la hausse comme à la baisse en conséquence de fluctuations de change. Capital sous risque: Les instruments financiers engendrent un facteur de risque. Par conséquent, la valeur de l’investissement et le rendement qui en résulte peuvent varier et la valeur initiale de l’investissement investi ne peut pas être garantie. Aucune référence à un titre financier ne saurait constituer une recommandation d'achat ou de vente de ce titre.