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Emerging market economies have been primary drivers of global growth, and investors are looking for ways to access this segment of the market to diversify their portfolios. With lower volatility than many equities, the Columbia Emerging Markets Fixed Income strategy has the potential to deliver an attractive total return — a function of both yield and the possibility for capital appreciation.

Investment Approach

We believe that emerging markets are only partially efficient and that fundamentally driven, active management of emerging market fixed income portfolios can add value for clients. The all-weather strategy invests mainly in hard currency but considers out of benchmark investments like agency, local currency and corporate debt as an alternative way to gain desired country exposure. A fundamentally based diversified approach, one that has the flexibility to access the full breadth of emerging market opportunities, provides a competitive return experience while seeking to minimize concentration and liquidity risk.

Distinguishing Features

  • Flexible approach utilizing full spectrum of debt securities to access the growth story of emerging economies
  • Proprietary country tiering model with an extensive commitment to fundamental fixed income research
  • Firm has managed emerging markets assets as part of multi-sector fixed income portfolios since 1989
  • A deep and diverse team of experienced emerging markets specialists for extensive breadth of coverage.
  • Combined bottom-up and top-down approach to pursue strong returns through varying market environments
  • Excellent historical track record

Investment Process

Country tiering
  • Fundamental analysis of key economic variables drive our risk tiering approach
  • Countries with similar risk profiles are placed in ’risk tiers’ to better quantify aggregate risk
Country relative value
  • Comparison of countries within risk tiers
  • Seek best risk-adjusted profiles among tiers
Risk Environment
  • Examines risk appetite measures, capital flows and growth trends
  • Global investment environment creates the context for portfolio construction
Issue selection
  • Analyze the shape and slope of sovereign yield curve and consider technical factors
  • Country and relative value analysis determines the weightings of countries within the same risk tier
Portfolio construction
  • Index is point of departure for constructing a portfolio and setting up exposure sizes
  • Positions are regularly reevaluated to examine spreads and fundamentals
  • Off index exposures used to gain country exposure for greater risk adjusted return potential
Columbia Management and its affiliate Threadneedle Investments collaborate to manage certain portfolios in this strategy. This collaboration adds significant resources and expands our global research capabilities.