Emerging Market Bonds
The Stern family has been an active investor in emerging markets for generations. In the nineteenth century, the Stern family and its banks help to found and were shareholders in important banks that have prevailed until today, like Garanti Bank in Turkey or Banamex in Mexico. Stern family banks in Paris, London and Frankfurt issued bonds in Europe for companies from many countries. The family also had important investments in one of the key industries of the largest emerging market of the time, railways in the United States.
In more recent times, J. Stern & Co. has developed its Emerging Market Corporate Bonds strategy which seeks to preserve and create wealth by investing in a portfolio of quality emerging market businesses with the specific investment objective to:
- Generate a total return of 5-6%, net of fees, from income and capital growth over the medium term
- Maintain low overall volatility with a standard deviation of 4-6% (c.50% lower than that of global equities)
- Provide diversification from other major asset classes (particularly developed market equities and fixed income)
The strategy pursues an unconstrained approach with the flexibility to take advantage of idiosyncratic opportunities as and when they arise. Typical characteristics of the strategy are:
- Concentrated portfolio of 30-50 holdings
- Short duration (average less than 5 years)
- Hard currency USD denominated, publicly traded liquid bonds
- Investment Grade and High Yield
- 100% corporate and quasi-sovereign issuers
- Industry and geographic diversification
- Rigorous selection process based on proprietary bottom-up issuer research, including ESG integration.
J. Stern & Co. offers the Emerging Markets Bond strategy in bespoke portfolio accounts.