Dear Investors,
As a follow-up to the latest Investment Committee Update, we would like to highlight several implementation solutions.
Increasing emerging market equity exposure
- ACTIVE STRATEGY
PrivilEdge - American Century Emerging Markets Equity Link to factsheet
The Fund invests in emerging market equities globally. It applies a fundamental, bottom-up, growth approach, which focuses on earnings acceleration instead of an absolute level of growth (focus on companies with an inflection point in their business fundamentals).
The portfolio is actively managed, and comprises 80 to 110 holdings. It is built within defined sector and country ranges to avoid large deviations.
As of 31 October 2019, the year-to-date performance was 15.4% vs 10.4% for the benchmark. The Fund tends to perform best in earnings driven markets where investors focus on fundamentals. Sector-wise, the largest exposure is in consumer discretionary with relatively little exposure in materials and energy vs benchmark.
- PASSIVE STRATEGIES
Amundi MSCI Emerging Markets UCITS ETF USD (synthetical replication, Accumulative) - LU0480132876 (see attached factsheet)
UBS ETF (LU) MSCI Emerging Markets UCITS ETF USD (physical replication, Distributive) - LU1681045453 (see attached factsheet)
The MSCI Emerging Markets Index captures large and mid cap representation across 26 emerging markets countries. With 1’202 constituents, the index covers approximately 85% of the free float-adjusted market capitalisation in each country. The sector breakdown is led by financials (24.7% of the total market cap), followed by information technology, consumer discretionary and communication services (15.4%, 13.3% and 11.0%, respectively). The index is mainly exposed to China (31.8%), Korea (12.1%), Taiwan (11.9%), India (8.9%) and Brazil (7.8%).
In terms of execution, block trades are highly recommended. To participate, please enter your orders in G2 before tomorrow 20 November 15H00 CET, and kindly add “Block Trade” in the comments section. Note that orders without this reference will be executed immediately.
Increasing global high-yield exposure:
In addition to direct lines, you may increase your allocation to global high-yield corporate bonds by using the following active and passive strategies.
- ACTIVE STRATEGIES - a combination of two funds
PrivilEdge – T Rowe Price European High Yield Bond (European HY) Link to factsheet
The fund mainly invests in bonds denominated in EUR issued by high-yield corporates. It tends to have a low-quality bias with an overweight in single B issuers.
Yield-to-worst (in EUR): 4.33%*
Effective duration: 2.66 years*
Average credit rating: B+*
*As of October 2019
PrivilEdge – Columbia US Short Duration High Yield (US short-duration HY) Link to factsheet
The fund invests in short-maturity bonds denominated in USD issued by high-yield corporates, mostly based in the US. It has a defensive profile due to the short-term nature of these bonds and the manager’s style, which favours BB issuers.
Yield-to-worst (in USD): 3.21%*
Effective duration: 1.19 years*
Average credit rating: BB-*
*As of October 2019
- PASSIVE STRATEGIES
iShares Global High Yield Corp Bond UCITS ETF (see attached factsheets)
iShares Global High Yield Corp Bond UCITS ETF (Acc.) - IE00BYWZ0440
iShares Global High Yield Corp Bond UCITS ETF (Dis.) - IE00B74DQ490
iShares Global High Yield Corp Bond UCITS ETF EUR Hedged (Dis.) - IE00BJSFR200
iShares Global High Yield Corp Bond UCITS ETF CHF Hedged (Acc.) - IE00BKBF4J08
iShares Global High Yield Corp Bond UCITS ETF GBP Hedged (Dis.) - IE00BJSFQX44
The fund physically replicates the Markit iBoxx Global Developed Markets Liquid High Yield Capped Index, offering direct investment in 1’437 sub-investment grade rated bonds (known as high-yield bonds) across all sectors in developed countries. The currency risk is reduced through BlackRock’s daily hedging, with thresholds across hedged share classes.
Yield-to-maturity:
Unhedged 4.87%
EUR Hedged 3.19%
CHF Hedged 2.79%
GBP Hedged 4.51%
Effective duration: 3.12 years
Average credit rating: B1/BB-/BB (M/S/F)
In terms of execution, block trades are highly recommended due to the liquidity of the underlying market. To participate, please enter your orders in G2 before tomorrow 20 November 15H00 CET, and kindly add “Block Trade” in the comments section. Orders without this mention will be executed immediately.
Best regards,
Investment Committee
