Investing in 75+ Emerging Markets, delivering equity-like returns with bond-like volatility

In breve

The Aperture New World Opportunities – Two years on Fund Manager Peter Marber discusses his pioneering approach and gives his thoughts on where he sees Emerging Market opportunities in the months to come
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Investing in 75+ Emerging Markets, delivering equity-like returns with bond-like volatility 

Two years on

It’s now two years since the launch of the Aperture New World Opportunities Fund. The fund was designed to deliver equity-like returns with bond-like volatility. Since inception, that’s exactly what it’s done.

With a portfolio consisting primarily of short-duration, hard-currency emerging-market bonds, the fund has outperformed its benchmark, the Bloomberg Barclays Emerging Markets USD Aggregate 1-5 Year Index, by 1.36 percentage points a year. Net of fees, the fund’s annualised return is 15.51% in USD with volatility around 4% – not bad considering this includes the market gyrations during the pandemic (1Y performance, as at end of March 2021) (1).

Navigating the Covid crisis

Despite the severe challenges of the Covid-19 crisis, the fund’s performance was particularly strong in 2020. With a net-of-fees return of 7.90%, beating gross market returns from both US high-yield and US municipal indices.

This performance is a testament to the experience of the fund’s nine-strong team, 5 analysts and 4 traders, led by pioneering and award-winning global investor Peter Marber.

Targeting superior performance

Peter notes that returns from traditional short-duration bond funds don’t look very different to those of money-market funds. But the New World Opportunities Fund targets much more attractive performance (2).

This is done in two ways. First, the fund aims to achieve a superior market return by harnessing a persistent anomaly in investors’ attitude to 75+ developing countries in Asia, Africa, Middle East, Latin America, and the former Soviet Union . Then, if this superior beta is secured, the team looks to add alpha through wide-ranging strategies not normally associated with short-duration bonds. Throughout, the team aims to damp down volatility

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