Friday, July 25, 2014

Betting Big on Russian Bonds

Even the Czar's bonds evenually paid off, a little.
From City AM:
Why ACPI is betting big on Russian bonds
Why ACPI is betting big on Russian bonds
Intense scrutiny from the international community and the threat of far-reaching sanctions do not undermine the fundamental strength of the Russian bond market.

That is the view of Daniel Moreno, head of emerging markets fixed income at London-based boutique ACPI Investment Managers.

While other managers have either cut their Russian exposure or warned over ‘absurdly cheap’ valuations, Moreno has increasingly added to his Russian holdings over the past six months.

‘There is one thing that is a clear negative and that is the political situation, meaning the geo-political situation. Russia is at the forefront of lots of discussions because of criticism and pressure from the United States and the EU, which are trying to push Russia into a corner.’

‘Even though it is particularly hard to analyse the outcomes, we are thinking this will be seeing a stabilisation within six months or so.’

Moreno assumed responsibility for the ACPI Emerging Markets Fixed Income Ucits fund in January. He took over from Alia Yousuf, who subsequently joined ING IM.

Under Moreno’s stewardship, the fund has returned 8.19% over the six months to the end of June 2014. This compares to a 7.6% rise by its benchmark, the LCI ML HY/JPM EMLI+/JPM EMBI+ (1:1:1).

He attributes a large portion of this outperformance to the returns generated by exposure to Russia over a turbulent period. ‘We hold assets that we believe have value and, back in January, Russian bonds didn’t have value.’...MORE