Philosophy
DCM believes that Emerging Market Debt (EMD) is a unique asset class that may provide attractive returns with little correlation among other major asset classes. We believe the secular growth of emerging market economies will continue to bring profound changes to the global economic environment, global financial markets and international politics and this should lead to attractive investment opportunities in the future.
These opportunities can be uncovered through deep fundamental and quantitative research that uses both top-down and bottom-up analysis. The identification of securities that possess Global Competitive Advantages and Attractive Valuations are the heart of our investment philosophy.
Process
The DCM EMD team applies a disciplined, value-based investment process that integrates both top-down global analysis and bottom-up country research to systematically analyze emerging market securities. Our investment process has three major steps:
1) Global Macro Analysis – this is the most important stage of our process and is used to identify dominant global themes and the major driving forces in the world economy.
2) Country Fundamental Research – we conduct deep fundamental research to recognize emerging countries that should have a sustainable benefit from the global driving forces.
3) Valuation Analysis – a solid, consistent, and sensible valuation metric is the foundation of our investment process. We look to find bonds with valuations that are attractive in comparison to their underlying fundamentals.
In addition, an important element of our process is our risk management. Our risk principles include a quantitative and qualitative measurement of portfolio risk, active management of global macro risks, an appropriate level of diversification, and a risk-adjusted return focus.
The output of our process is a well diversified portfolio of emerging markets bonds of countries that have global competitive advantages with attractive valuations.
