Why T. Rowe Price for Emerging Markets Debt?
This is an asset class where investors can outperform most other areas of fixed income and many areas of equity if they’re able to do credit work successfully. We have a systematic process that we use to approach countries and credits; we have very experienced people implementing that process; our analysts spend a lot of time on the ground and follow the news on a very granular level for the companies and credits that they cover.
We are looking for specific situations where we can identify fundamental improvements in countries or companies that are going to result in their credit appreciating. [Analysts’] advice is then evaluated through a systematic framework with a very close eye to risk allocation. We want to make sure that we build a portfolio where we are able to capture each of those idiosyncratic stories that may add outperformance for our clients, while avoiding broad systematic risks or taking individual bets that could make or break a given performance period.
I think there are several factors that contribute to effective collaboration on the team. The first, I would say, is that this is an organization where people are culturally inclined towards collaboration. It’s an important value for the company, and I think you see it in terms of how everybody approaches their jobs. Speaking about the EM debt team specifically: this is a group of people that have been working together closely for several years. So, regardless of where they may be in the world at any given time, I think there’s a degree of comfort … that people are all talking to one another. They may travel together, they may travel separately, they may travel with our colleagues from the equity side of the business, but there’s a very free flow of information. That can be in the context of formal meetings or video conferences; it can be in the context of attending conferences together or doing country visits; or it can be in the context of the constant, more informal, electronic and telephone conversations that happen around the clock as news flow comes in around the names we own.
Key Risks - The following risks are materially relevant to the strategy highlighted in this material:
Transactions in securities denominated in foreign currencies are subject to fluctuations in exchange rates which may affect the value of an investment. Returns can be more volatile than other, more developed, markets due to changes in market, political and economic conditions. Debt securities could suffer an adverse change in financial condition due to ratings downgrade or default which may affect the value of an investment.
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