Frankfurt-based Universal Investment has partnered with Denmark-based emerging markets boutique Global Evolution to launch a new absolute return fund that will invest in frontier and emerging markets.
Known as the CGS FMS Global Evolution EM Debt and FX fund, the UCITS vehicle invests in bonds and currencies of established emerging markets as well as frontier markets.
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Managed by the Danish group’s investment team, the fund seeks to generate positive returns via a combination of a high yielding emerging and frontier market bond portfolio to enhance and protect fund performance.
The fund, which invests in hard currency and local currency bonds, will expand the emerging and frontier market fund family that now comprises more than 100 countries.
In addition, the fund also invests selectively in frontier countries such as Nigeria, Zambia or Peru and uses derivatives to take targeted long and/or short positions.
It aims to generate a return of 10% per annum at lower volatility compared with standard emerging market indices.
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By GlobalDataMorten Bugge, CIO of Global Evolution, said: "The combination of a bond portfolio with a derivative overlay enables us to systematically optimise the fund’s risk-return profile and reduce the risk of a severe drawdown, particularly in volatile phases.
"This makes the CGS FMS Global Evolution EM Debt and FX Fund a suitable option for investors looking for access to emerging and frontier market bonds as well as an active management of currency and interest rate risks," he added.
