Strategies for generating actual yields from bond investments

In the face of a challenging market environment, Carmignac, a renowned French asset manager, is focusing on generating returns. The Business Development Director for Germany, Ingo Boxleitner, has emphasised this strategic approach.

One of Carmignac's flagship funds, the Carmignac Portfolio EM Debt, managed by Joseph Mouawad since 2017, incorporates Environmental, Social, and Governance (ESG) factors as a risk management component in its emerging market bond strategy. This approach is in line with the growing recognition of ESG factors as crucial in identifying risks in emerging markets.

The universe of emerging market bonds has evolved significantly and is now recognised as a distinct asset class. This expansion offers a wealth of opportunities, a view shared by Carmignac expert, Majoros. Majoros also believes that emerging markets have developed well and continue to offer positive real yields.

The corporate bond market, while vast and largely insufficiently analysed, presents even more opportunities. Carmignac's experts pay particular attention to the yield on the market that compensates for the issuer's risk when selecting titles.

Countries such as India, Poland, South Korea, Taiwan, and Indonesia are particularly attractive, according to Carmignac's experts. These countries boast dynamic growth prospects, structural reforms, and sectors like technology, financial inclusion, and sustainability. The experts view the risk for interest rates in Emerging Markets as manageable, emphasising the potential in local currency bonds with attractive real yields and the importance of global diversification amid monetary policy uncertainties.

Carmignac evaluates the default risk and potential losses for each bond before investment. This rigorous approach has earned the firm top ratings from Scope, with Carmignac being named the "king of the shelf" among small companies at the beginning of the year.

Two-thirds of Carmignac's assets are held in bonds, reflecting the firm's focus on this area. The Carmignac Portfolio Credit, managed by Pierre Verlé and Alexandre Deneuville, provides access to global credit markets.

The current webinar offers insights into which countries are particularly attractive and the interest rate risk in emerging markets for Carmignac's experts. Registration for upcoming webinars on topics such as Europe, capital market developments, and Asia is available.

All Carmignac bond funds have received top ratings from Scope, underscoring the firm's commitment to delivering strong performance in the bond market. The corporate bond market, with its many more issuers than in equities, offers a vast landscape for exploration and potential returns, a challenge that Carmignac is eager to embrace.