Asian Debt Hard Currency

Strategy description

This is an actively managed strategy that invests in debt securities issued by Asian sovereign as well as corporate issuers, both investment grade and non-investment grade (high yield). The main focus of the strategy is on debt issued in hard currency. Off-benchmark investments in local currency debt are permitted (up to 1/3rd of the portfolio), of which the resulting currency exposures are actively managed. The strategy is well-diversified and exploits opportunities across Asia excluding Japan. We aim to add value in various ways. The emphasis is on individual issuer selection, but we also focus on curve positioning, country positioning, sector selection, and currency management.

Objective

Our objective is to outperform the JPMorgan Asia Credit Composite Index over a 3 year period, with a target information ratio of 0.5.

Key information

Investment Universe The investment universe consists of debt instruments denominated in USD, issued by issuers from Asian countries, such as China, Hong Kong, India, Indonesia, Malaysia, South Korea, Philippines, Singapore, Taiwan and Thailand.
Investment Style Multi-alpha, fundamental, bottom-up driven
Benchmark JP Morgan Asia Credit Composite Index
Target Tracking Error 1% to 3%
Base Currency USD
Currency Exposure Up to 1/3rd of the portfolio can be invested in debt issued in Asian currencies (off-benchmark), Yen or Euro. Currency risk is actively managed.
Single Holding Exposure Maximum single holding 10%
Use of Derivatives Derivatives (typically FX forwards) are used in this strategy for hedging or taking active currency exposure. Bond futures and interest rate swaps are used to establish the preferred interest rate duration profile.


NN Investment Partners

+44 (0) 207 382 1332

Key elements

  • Local presence combined with global perspective
  • Rigorous investment approach focused on fundamental research
  • Sophisticated risk management

Documents

Latest insights

The investment process is characterised by its systematic, disciplined framework for analysing sovereign and corporate hard and local currency debt
securities. The key strengths of the process may be summarised as follows:

Key Elements of the Strategy

  • Local presence combined with global perspective
    The Asian Debt team is based in Singapore and is responsible for dedicated Asian portfolios. The team is also responsible for the Asian assets of NN IP's Global Emerging Market Debt and Global Corporate Credit strategies. The team members collaborate and share views on developments and trends in global emerging and credit markets around the world, enhancing the quality of our investment process and tools.
  • Rigorous investment approach focused on fundamental research
    Our systematic, disciplined investment process is one that is time-tested and consistent in generating strong returns, both absolute and versus benchmarks. This investment apporach is based on using hard data as a starting point for our scoring sheets.
  • Sophisticated risk managment
    By taking a large number of imperfectly correlated risks across countries, sectors and securities, we believe this is likely to result in a higher Information Ratio than market-timing or 'beta' risk. We attempt to minimise specific event risks by applying single-country, issuer and issue limits, with the belief that our approach to diversify risks leads to better risk-adjusted returns.

NN Investment Partners

+44 (0) 207 382 1332

Key elements

  • Local presence combined with global perspective
  • Rigorous investment approach focused on fundamental research
  • Sophisticated risk management

Documents

Latest insights

Joep Huntjens

Joep Huntjens

Head of Asian Fixed Income

Experience since 1996

NN Investment Partners

+44 (0) 207 382 1332

Key elements

  • Local presence combined with global perspective
  • Rigorous investment approach focused on fundamental research
  • Sophisticated risk management

Documents

Latest insights