The Principal Finisterre Unconstrained Emerging Markets Fixed Income Fund (the Fund) aims to deliver income and capital gains while managing liquidity and limiting drawdowns during market crises. The Fund seeks to offer investors most of the emerging market debt upside with half the volatility and less than half of the drawdowns. It’s a flexible “all-weather” strategy designed to deliver an optimal yield-liquidity-volatility profile in any market condition.
Style of investment
The Fund follows an innovative and well-tested market segmentation and portfolio construction process. It builds performance from a combination of income, potential capital gains from market timing on liquid “momentum” assets and “value opportunities” from bottom-up credit and relative value strategies.
Because the Fund is not tied to a specific benchmark, Finisterre’s portfolio managers are free to invest according to their strongest convictions. This freedom allows them to take advantage of diversity and changes with the emerging market debt market.
Finisterre’s experienced EMD total return management team benefits from the support and idea generation of a 15-year-old EMD hedge fund platform. Their innovative portfolio construction process has demonstrated its resilience through many episodes of market turbulence.
The team designed the Fund to maximize yield generation over the market cycle, while managing liquidity and market drawdowns during crises. This provides potential for significantly better risk-adjusted returns than long-only managers can offer.
Regulatory risk warnings
Investing in emerging markets has associated risks including currency risk, confiscatory taxation, nationalization of assets, possibility of expropriation, volatility, liquidity and external factors e.g. war or natural disasters. Derivatives are volatile and carry a high degree of risk, including liquidity risk. Leverage can magnify losses as well as gains. There is no guarantee that the investment objective of the Fund will be achieved. The potential for profit is accompanied by the possibility of loss.
For further information on how to invest, please visit Principal Global Investors