The fund aims to provide a positive total return (combined income and capital growth) that is higher than the hard currency emerging market bond market over any three-year period.
Investment policy and strategy
Performance measurement: The fund’s performance is measured against the average of the Morningstar Global Emerging Markets Bond fund sector, representing the hard currency emerging market bond fund market. The investment manager has the discretion to identify the countries that qualify as emerging markets. Typically, these will be countries that the International Monetary Fund or World Bank defines as emerging or developing economies.
Core investment: At least 80% of the fund will be invested in bonds issued by emerging market governments and government-related institutions, denominated in hard currency. These refer to currencies of developed countries, including, but not limited to, the US dollar, euro, yen and sterling.
The fund typically invests directly in assets. It may also invest indirectly via derivatives.
Other investments: The fund may also have limited investment in bonds issued by emerging market companies or bonds issued in emerging market currencies. The fund may also invest in cash and deposits, other debt instruments and other funds.
Strategy in brief: The fund is managed with a flexible investment approach which begins with analysis of the global economy. Within this framework, the fund manager’s approach involves forming a view on the economic outlook, identifying countries with solid fundamentals and evaluating the quality of individual bonds. This disciplined, multi-pronged approach provides the basis for the fund’s asset allocation, country and currency weighting, as well as selection of bonds.
Bonds: Loans to governments and companies that pay interest.
Derivatives: Financial contracts whose value is derived from other assets.
Risks associated with the fund
The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.
Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.
Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.
In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.
The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.
Further details of the risks that apply to the fund can be found in the fund's Prospectus.
The Fund allows for the extensive use of derivatives.