Citywire - For Professional Investors

Register to get unlimited access to all of Citywire’s fund manager database. Registration is free and only takes a minute.

Loomis Sayles bond veteran: take EMD currency risk over playing duration

Loomis Sayles bond veteran: take EMD currency risk over playing duration

Loomis Sayles’s David Rolley is embracing the inherent volatility of emerging market local currency debt in a bid to access higher yields.

Speaking at a media lunch on Tuesday, Citywire + rated Rolley said that in today's low yielding environment trying to make money in developed markets by shorting duration is not the solution.

‘Why don’t you look at places that still give you 5% to 9%?’ asked Rolley, referring to high interest rates in countries like India, Brazil and South Africa.

Adding: ‘You can access those yields by buying those bonds in a variety of local markets and then you have decide what to do with the FX volatility risk which that implies. Even if interest rates fall that is a better idea then buying something at 23 basis points and hoping it will go to 11.’

The manager of a number of funds including the Loomis Sayles Global Opportunistic Bond, said he has been making ‘tight stops’ on FX volatility by switching strategies between hedged and unhedged.

‘On any given day we can be open in Brazil or hedged. We can be open in Mexican peso or hedged—we’re hoping at least half the year we’re unhedged and if we’re getting that 7%,8%, or 9% that will be pretty good,’ he said.

The firm’s multi-asset manager Maura Murphy said that she was adding duration in emerging markets as the sector is being buoyed by a softer dollar and commodities rebounding.

‘Their central banks are cutting rates, inflation is falling and we have improving growth,' said the Citywire AA-rated manager. 'All of that is supportive for adding duration in that space, specifically we like Brazil, Colombia and Mexico. In Asia, we like Indonesia.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Events
  • Citywire Latin America 2017

    Citywire Latin America 2017

  • Citywire Miami 2017

    Citywire Miami 2017

  • Citywire Santiago 2017

    Citywire Santiago 2017

  • Citywire Mexico 2017

    Citywire Mexico 2017

  • Citywire Miami 2017

    Citywire Miami 2017

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015