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 of investments and the income from them will rise and fall. This will cause
the fund price, as well as any income paid by the fund, to fall as well as rise. There
is no guarantee the fund will achieve its objective, and you may not get back the
amount you originally invested.
The value of the fund may fall if the issuer of a fixed income security held is unable
to pay income payments or repay its debt (known as a default).
When interest rates rise, the value of the fund is likely to fall.
Changes in currency exchange rates will affect the value of your investment.
The fund will invest in emerging markets which are generally smaller, more sensitive
to economic and political factors, and where investments are less easily bought and
sold. In exceptional circumstances, the fund may encounter difficulties when selling
or collecting income from these investments, which could cause the fund to incur a
loss. In extreme circumstances, it could lead to the temporary suspension of dealing
in shares in the fund.
The fund may use derivatives in a limited way to gain exposure to investments
exceeding the value of the fund (leverage). This may cause greater changes in the
fund’s price and increase the risk of loss.
The fund may use derivatives with the aim of profiting from a rise or a fall in the
value of an asset (for example, a company’s bonds). However, if the asset’s value
varies in a different manner, the fund may incur a loss.
If the share class is hedged (H share class), it aims to mirror the performance of another share class. We cannot guarantee that the hedging objective will be achieved. The hedging strategy will limit holders of the hedged share class from benefiting if the hedged share class currency falls against the US dollar.
Where market conditions make it hard to sell the fund’s investments at a fair price
to meet customers’ sale requests, we may temporarily suspend dealing in the fund’s
Some transactions the fund makes, such as placing cash on deposit, require the
use of other financial institutions (for example, banks). If one of these institutions
defaults on their obligations or becomes insolvent, the fund may incur a loss.
The Fund allows for the extensive use of derivatives.