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Galloway Capital - December 11

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Text of Galloway Capital - December 11

  • 1. CAPITALDecember 2011
  • 2. INVESTMENT CASE
  • 3. OPPORTUNITYIdentify the best investment opportunities in the Emergingand Frontier Markets, providing clients non-leveragedequity-like returns with fixed income seniority within acompanys capital structure 3
  • 4. MARKET PROFILECurrent ScenarioHigh growth expectation for the Emerging MarketsTendency for the developed economies to maintain its low fixed income ratesConstantly growing overseas interest in Emerging Markets assetsWell-managed Emerging Market companies solidified their balance sheets and are gaining access to capital 4
  • 5. OPPORTUNITYINVESTING IN EMERGING MARKETS HIGH YIELD Emerging Markets and Advanced Economies GDP Growth500% GDP Current USD Emerging Markets400% GDP Current USD Developed Economies300%200%100% 0% 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: Bloomberg / Dec 2010 5
  • 6. OPPORTUNITY INVESTING IN EMERGING MARKETS HIGH YIELD EM High Yield, US High Yield and US Equities accumulated return over the last 10 years Accumulated returns over the last 10 years150% 140% S&P 500 Index125% 120% 116% CS EM Corp Bonds Index100% iBoxx USD Liquid HY Index 100%75% 80% 71%50% 60%25% 40% 0% 20% 16% 9% 11% 9%-25% 0%-50% SPX IBOXHY CEMBTOTR dez-07 dez-01 dez-02 dez-03 dez-04 dez-05 dez-06 dez-08 dez-09 dez-10 Vol (Std. Dev.) Acum. Return Source: Bloomberg / Oct 2011 6
  • 7. OPPORTUNITY INVESTING IN EMERGING MARKETS HIGH YIELDEver since 2002, the major selloffs in EMD occurred after credit crises that emanated from the developedworld, not the emerging world. Lehman crisis created a huge buying opportunity in EMD in 2008/2009. If thispattern holds, the selloff induced by the European crisis could be creating another big buying opportunity. Source: JP Morgan Asset Management 7
  • 8. OPPORTUNITY INVESTING IN EMERGING MARKETS HIGH YIELDThe trend toward improving credit quality in EM is structural and secular in nature. The long-term driversof this structural change are: lower and more sustainable debt levels than most developed economies,younger populations, higher commodity prices, improving current account balances, rising foreignexchange reserves, sustainable wage increases driven by productivity gains, rising consumption due torising wages, more government taxing power due to better demographics and rising incomes, etc Source: IMF as of September 2011 8
  • 9. OPPORTUNITYINVESTING IN EMERGING MARKETS SOVEREIGN Emerging Markets countries in general have higher expected growth rates with often lower leverage when compared to Developed Markets Selective Emerging Markets countries still show gaps between its current ratings and their macroeconomic reality providing opportunities to obtain higher returns when upgrades occur 9
  • 10. OPPORTUNITYINVESTING IN EMERGING MARKET BONDS The Emerging Markets Debt market is dominated by Large Institutional Funds and Private Banks Large institutional funds also tend to focus on Emerging Markets High Grade credits due to issue size and liquidity Private Banks will mostly offer clients obvious Emerging Markets High Grade names which the bank supports and that the client feels comfortable with Lack of reach from the larger players often forces the Emerging Markets High Yield asset class to provide investors higher yields, even beyond its implicit risks 10
  • 11. THE FUND
  • 12. GALLOWAY GLOBAL EMERGINGMARKETS FIXED INCOME FUND Fixed Income long-only fund specialized in both Emerging Markets Corporate and Sovereign Credit Bonds The Fund aims for consistent risk-adjusted returns by focusing on Global Emerging Markets Multi-approach Due Diligence Highly diversified strategy No Leverage and No use of Derivatives Fully Invested 12
  • 13. GALLOWAY GLOBAL EMERGING MARKETS FIXED INCOME FUND Historical Performance JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD Since Inception 2009 1.47% 0.31% 4.21% 4.95% 6.50% 1.65% 1.94% 1.20% 24.33% 24.33% 2010 1.72% 1.44% 3.48% 1.12% -3.32% 0.64% 3.90% 0.35% 3.61% 3.22% 0.32% 1.19% 18.91% 47.84% 2011 1.87% 0.86% 0.90% 1.27% -0.02% -0.21% 2.14% -7.26% -11.82% 8.64% -4.73% -9.43% 33.90%60% 14.64% 13.17%50% 11.96%40%30%

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