February 29, 2024 | Emerging Markets Debt

Emerging Markets Debt Summit Research Platform Summary

Speaker

Jared Lou, CFA

Portfolio Manager

To help us synthesize information about the countries we invest in, as well as global trends, our emerging markets debt team uses an internal technological research platform called Summit.

To help us synthesize information about the countries we invest in, as well as global trends, we use an internal technological resource called Summit.

We start by analyzing the economic data in the top middle box. This data includes our own forward-looking projections of economic variables.

These projections are then fed into our sovereign risk model, as seen in the lower left corner. This is the starting point of our country investment decision-making process.

The sovereign risk model helps us to assess how risky each country is, as well as whether we believe spreads properly compensate us for the risk.

The top left box is a written summary of our investment decisions and justification, which makes it easier for our team members around the world to get up to speed on current conditions across time zones.

Then the opportunity set box in the middle helps us to assess which bonds along the country’s curve we consider to be most attractive.

We are also able to analyze the local currency opportunity set and determine whether hard currency investments or local currency investments are more attractive. Here, we can see that the local currency curve is upward-sloping, rates are high, and it appears the market is pricing in considerable cuts over the next two years. However, in our view, the currency has rallied significantly after being oversold, and we are more cautious on the outlook.

Circumstances can change, but this illustrates the way in which we use Summit.

The views and opinions expressed are those of the speakers as of the date of publication, are subject to change without notice as economic and market conditions dictate, and may not reflect the views and opinions of other investment teams within William Blair. Factual information has been obtained from sources we believe to be reliable, but its accuracy, completeness, or interpretation cannot be guaranteed. This material may include estimates, outlooks, projections, and other forward-looking statements. Due to a variety of factors, actual events may differ significantly from those presented.

This video has been provided for informational purposes only and not intended as investment advice or a recommendation of any particular strategy or investment product, or as an offer to buy or sell any securities or related financial instruments in any jurisdiction. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions. Charts or graphs referenced herein have been obtained from Summit, William Blair’s proprietary investment research platform. Model scores are based on William Blair’s proprietary models. This information is provided for illustrative purposes only, is not intended as investment advice, and is not representative of the past or future performance of any William Blair product or strategy.

Investing involves risks, including the possible loss of principal. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks. These risks may be enhanced in emerging markets. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit, and inflation risk. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Diversification does not ensure against loss. Past performance is not indicative of future results. This material is a marketing communication and is not intended for distribution, publication or use in any jurisdiction where such distribution or publication would be unlawful.

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