Emerging Market Corporate Debt

PREPARED FOR PROFESSIONAL CLIENTS AND, IN SWITZERLAND QUALIFIED INVESTORS
AS AT 31 MAY 2015
BNY MELLON EMERGING MARKETS
CORPORATE DEBT FUND
INVESTMENT MANAGER
INVESTMENT OBJECTIVE
Insight Investment Management
(Global) Limited: Insight are
leaders in absolute return
investing , multi-asset, specialist
equity solutions, fixed income and liability
driven investment.
A total return comprised of income and capital growth by investing in bonds and similar
debt investments issued by companies listed or located in emerging markets.
GENERAL INFORMATION
Total net assets (million)
$ 90.08
Comparative index / Benchmark
JP Morgan
Corporate EMBI Broad Diversified
Lipper sector
Lipper Global - Bond Emerging
Markets Global Corporates
Fund type
ICVC
Fund domicile
Ireland
Fund manager
Team approach
Base currency
USD
Currencies available
CHF, EUR, GBP, USD
Fund launch
31 Jan 2012
PERFORMANCE DISCLOSURE
Past performance is not a guide to future performance. The value of investments and the
income from them is not guaranteed and can fall as well as rise due to stock market and
currency movements. When you sell your investment you may get back less than you
originally invested. For a full list of risks applicable to this fund, please refer to the
Prospectus.
FUND COMMENTARY
Market review
Emerging-market debt markets as a whole were broadly unchanged by the end of May, but
there was some intra-month volatility as a significant spike in global bond yields took
centre stage. Yields on 10-year German Bunds and US Treasuries rose sharply before
falling somewhat in the second half of the month, and these moves were reflected across
global bond markets, including emerging-market debt.
Generally speaking, emerging-market local rates have been the most sensitive to moves in
core rates, especially when taking local-currency performance into account. External debt
has proved more resilient so far. Meanwhile, emerging-market currencies have broadly
succumbed to weaker currency policies pursued by many emerging-market central banks.
US dollar strength was also a factor: while the dollar initially weakened in May, it
subsequently strengthened, ending the month in a better position overall against a broad
range of currencies. Emerging-market corporates performed best against the backdrop of
uncertain global rates, as lack of supply and cheap valuations relative to global
counterparts attracted investors searching for yield. External corporates returned 0.52%
as measured by the JP Morgan CEMBI Broad Diversified Index, driven by strong
performance from high-yield bonds.
Performance/activity
The Fund made a positive return in May. The top-performing countries were Colombia,
Brazil and Russia. The best-performing sectors were oil & gas and consumer products. By
region, Latin America was the best performer.
As a very sharp increase in core rates levels and volatility has challenged emerging-market
assets, we increased the cash position in the Fund. We did so principally by divesting
names more sensitive to moves in developed-market rates as we held our exposure to
high-yield names steady. The net effect was a decrease in duration. In terms of regions, we
increased our exposure to Latin America slightly while cutting exposure in other regions.
By sector, we decreased exposure to oil & gas.
In greater detail, we sold holdings in Ivory Coast sovereign bonds and in Cencosud (Chile),
SOCAR (Azerbaijan) and OCP (Morocco). We also took profit in Pacific Rubiales in Colombia
after the bonds had a strong rally. We increased holdings in a few names, including Marfrig
(Brazil), TDBM (Mongolia), and Sberbank and Alfa-Bank in Russia. We participated in a new
issue from DP World (UAE).
Outlook
Portfolio holdings are subject to change
at any time without notice, are for
information purposes only and should
not be construed as investment
recommendations.
BNY Mellon Global Funds, plc
Increasing volatility in core rates and a lack of clarity on the health of the US economy,
which has in turn led to uncertainty over the timing of the first US rate hike, look set to
remain the main drivers of emerging-market asset performance for the near future. The
uncertainty over US monetary policy, ongoing weakness in commodities prices and
lacklustre emerging-market growth, but most importantly the high volatility in core rates
that remind us of the ‘taper tantrum’ in summer 2013, have combined to prompt our very
cautious stance on emerging-market debt.
BNY Mellon Emerging Markets Corporate Debt Fund
As at 31 May 2015
BNY MELLON INVESTMENT MANAGEMENT EMEA LIMITED - CLIENT SERVICES
Tel: +44 20 7163 2367 | Fax: +44 20 7163 2039
Email: [email protected] | Web: www.bnymellonim.com
Any views and opinions contained in this document are those of the author as at the date of issue; are subject to change and should not be taken as
investment advice.
IMPORTANT INFORMATION
This is a financial promotion for Professional Clients. In Switzerland, this is for Regulated Qualified Investors and Qualified Investors only. BNY Mellon Investment Management
EMEA Limited is the distributor of the capabilities of its investment managers in Europe (excluding funds in Germany), Middle East, Africa and Latin America. Investment
managers are appointed by BNY Mellon Investment Management EMEA Limited or affiliated fund operating companies to undertake portfolio management services in respect
of the products and services provided by BNY Mellon Investment Management EMEA Limited or the fund operating companies. These products and services are governed by
bilateral contracts entered into by BNY Mellon Investment Management EMEA Limited and its clients or by the Prospectus and associated documents related to the funds. You
should read the Prospectus and Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found at
www.bnymellonim.com. In Italy, before subscribing you should read the Prospectus and the Key Investor Information Documents. Both of these documents are available on our
website www.bnymellonim.com. Investments should not be regarded as short-term and should normally be held for at least five years. This material may not be used for the
purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised. This material should not be published
or distributed without authorisation from BNY Mellon Investment Management EMEA Limited. The Fund is a sub-fund of BNY Mellon Global Funds, plc, an open-ended
investment company with variable capital (ICVC), with segregated liability between sub-funds. Incorporated with limited liability under the laws of Ireland and authorised by the
Central Bank of Ireland as a UCITS Fund. The Management Company is BNY Mellon Global Management Limited (BNY MGM), approved and regulated by the Central Bank of
Ireland. Registered address: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland. In France, the Fund received an authorisation for marketing from the AMF. Before subscribing, please
read the most recent Prospectus and latest financial reports. The KIID, Prospectus, articles and latest annual report related to the Fund are freely available upon request to BNP
Paribas Securities Services, the centralising agent of this Fund in France: BNP Paribas Securities Services, 3 rue d'Antin, 75002 Paris, tél: 00 33 1 42 98 10 00. BNY Mellon
Investment Management EMEA Limited is an English private limited company with company number 01118580, having its French branch at 7 rue Scribe, 75009 Paris, France
registered with the RCS de Paris (510818644). BNY Mellon Investment Management EMEA Limited is authorised and regulated by the Financial Conduct Authority (25 The North
Colonnade, Canary Wharf, London E14 5HS, United Kingdom) and its French branch is subject to limited supervision by the French Autorité des Marchés Financiers and the French
Autorité de Contrôle prudentiel et de résolution. In Austria, the current Prospectus and the Key Investor Information Document are available free of charge from Raiffeisen
Zentralbank Österreich Aktiengesellschaft, Am Stadtpark 9, A-1030 Vienna. In Switzerland, BNP Paribas Securities Services, Paris, succursale de Zurich acts as representative
agent and paying agent for BNY Mellon Global Funds, plc. The Prospectus, Key Investor Information Document, Articles of Association, Annual Report and Semi-Annual Report
may be obtained free of charge from their offices at Selnaustrasse 16, 8002 Zurich, Switzerland. In Spain, BNY Mellon Global Funds is registered with the CNMV, Registration No.
267. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. BNY Mellon Investment Management EMEA Limited, BNY MGM and any other BNY Mellon
entity mentioned are all ultimately owned by The Bank of New York Mellon Corporation. Issued in UK and Europe (excluding Germany and Switzerland) by BNY Mellon Investment
Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial
Conduct Authority. Issued in Switzerland by BNY Mellon Investments Switzerland GmbH, Talacker 29, CH-8001 Zürich, Switzerland. Authorised and regulated by the FINMA. The
Bank of New York Mellon, DIFC Branch (the “Authorised Firm”) is communicating these materials on behalf of BNY Mellon Investment Management EMEA Ltd. BNY Mellon
Investment Management EMEA Ltd is owned by The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act
upon it. The Authorised Firm is regulated by the Dubai Financial Services Authority.
MIS0045-300615
Issued on 23/06/2015