Emerging market specialists, Finisterre Capital, is launching its Emerging Market Debt Total Return Strategy fund with former global head of emerging market fixed income at Axa Investment Managers, Damian Buchet joining as the firm’s chief investment officer for total return strategies.
The strategy will operate within an unconstrained hedge fund environment and use a well-tested total return portfolio construction process, developed by Buchet over his career. The strategy will target returns of 3% to 7% per year over a cycle. The strategy takes a holistic approach aimed at optimising the yield-liquidity-volatility profile of its portfolio across the market.
Buchet told Funds Europe: “I’m not a doom and gloom type for emerging markets. It’s a very diversified set of countries. Some will feel doom and gloom [but] many others will do the right job.”
Discussing the strategy that Buchet describes as a continuation of methods he has employed for 15 years, he says that it’s important to look at the macro environment as well as a country-by-country analysis. His top-down approach is complimented by Christopher Watson, head of credit research and a credit portfolio manager at the firm, who has a fundamental, research driven style.
“You have to look at policy credibility, whether its fiscal policy creditability or monetary policy. Political ability is important as a number of reforms aren’t difficult to implement. Government legitimacy with its electorate is something you also have to take into account,” Buchet adds.
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