The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global emerging markets bond market over any three-year period.
Investment policy and strategy
Core investment: At least 80% of the fund is invested in bonds issued by the governments, government agencies or companies of emerging market nations*,which can be denominated in any currency.
Other investment: The fund also invests in currencies, focusing mainly on emerging market currencies and major currencies such as the US dollar and euro. It also holds cash or assets that can be turned quickly into cash.
Use of derivatives: The fund typically invests directly, but may also investindirectly via derivatives. Derivatives may also be used to manage risks and reduce costs, as well as to offset the impact of currency exposures arising from the fund’s non-US dollar investments. For more information on the types of bonds held and derivatives used, please referto the Prospectus.
* Emerging market countries are defined as those includedwithin the MSCI Emerging Markets Index and/or those included in the World Bank’s definition of developing economies, as updated from time to time.
Strategy in brief: The investment manager selects investments based on an assessment of global, regional, and country-specific macroeconomic factors,followed by in-depth analysis ofindividual bond issuers.
The investment manager is assisted in the selection of individual bonds by the deputy fund manager and an in-house team of analysts. The fund is diversified by investing in a range of bonds from across the global emerging markets.
Performance comparator: The fund is actively managed.Acomposite index comprising 1/3 JPMorgan EM Government Bond Index Global Diversified, 1/3 JPMorgan EM Corporate Bond Index Broad Diversified and 1/3 JPMorgan EM Government Local currency Bond Index Global Diversified is a point of reference against which the performance of the fund may be measured. These indices represent the emerging market government bond markets denominated in hard currencies, the emerging market corporate bond markets denominated in hard currencies and the emerging market government bond markets denominated in local currencies, respectively.
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 fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset’s value vary in an unexpected way, the fund will incur a loss. The fund’s use of derivatives may be extensive and exceed the value of its assets (leverage). This has the effect of magnifying the size of losses and gains, resulting in greater fluctuations in the value of the fund.
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.