Universal-Investment and Global Evolution launch the first fixed income fund focused on frontier markets

Kolding/Frankfurt, 27 July 2011. Universal-Investment and Danish based emerging markets specialist Global Evolution launch the first fixed income fund focused on frontier markets. The investment managers of the Saxo Invest-Global Evolution Frontier Markets (Fixed Income) (ISIN LU0501220429) invest in government bonds from countries, which are at the beginning of their economic development like Mongolia, Mozambique and Serbia. Frontier markets have a very high potential for growth and credit improvements. Therefore, the return potential is much higher than for traditional emerging markets. The fund is highly diversified with current exposure to sovereign debts from 33 countries across Latin America, Eastern Europe, Middle East, Africa and Asia. The average yield to maturity of the portfolio is currently around 11%, the annual fund target return is about 10-12%. While all US-Dollar investments are hedged to Euro, investments in local currency instruments are unhedged.

The Global Evolution management team has invested in emerging markets sovereign debt and FX since the mid-nineties and built up a fundamental expertise for the characteristics of these markets. In this period, emerging markets have outperformed most other asset classes. “But the asset class of traditional emerging markets debt has been through a significant structural maturation and credit improvement”, says Global Evolution CIO Morten Bugge, who analyses and visits with his investment team frontier countries around the world to identify investment opportunities before mainstream investors do.

Decreasing yields for traditional emerging markets bonds
While traditional emerging markets debt is now rated investment grade and offers yields of typically 6-7%, new markets are entering the dynamic emerging markets debt universe. So called frontier markets as Congo, Sri Lanka and Uruguay increase their financial strength and open up for a financial market by issuing international debt or give international investors access to their own local debt markets. ”The current economic and financial status of frontier markets can be compared to the traditional emerging markets in the late nineties”, describes emerging markets expert Bugge this sector, which was so far out of mind for most investors.

Frontier financial markets are generally smaller, less developed and sovereign credit risks are higher than for traditional emerging markets. The current average credit rating of the Global Evolution Frontier Markets (Fixed Income) is “single B”. Bugge expects that frontier markets will undergo the same very positive development in the coming 5-10 years as traditional emerging markets have gone through in the last decade.

Examples of frontier markets with very good prospects that the fund is invested in are Mongolia, Mozambique and Serbia. “Mongolia offers vast natural resources, very high growth, yields of 10% and large potential for currency appreciation” exemplifies Bugge. Mozambique, a major coal producer and exporter in the making, turned out the best performing position in the first six months of 2011. Serbia stands to benefit significantly from closer integration with the EU and offers yields of 12.5%. Serbian bonds have been one of the best performing positions in the fund since launch.

First member of a new emerging markets family
The Global Evolution Frontier Markets (Fixed Income) Fund was launched in Luxemburg on Saxo Invest SICAV, the fund platform of Danish Saxo Bank and is now also licensed for distribution in Austria, Germany, Sweden and United Kingdom. The fund already reached a volume of around €56 m. The Global Evolution Frontier Markets (Fixed Income) Fund is the first member of a new emerging markets family launched by Global Evolution and Universal-Investment. Other interesting investment strategies for emerging market debts, both in hard and local currencies, as well as emerging markets currency strategies and dynamically managed emerging markets funds has also been launched by Global Evolution under the umbrella of the Saxo Invest SICAV and will be licensed for distribution in Germany in the coming period.

FUND DATA AT A GLANCE
Investment Managers: Global Evolution Fondsmæglerselskab A/S, Kolding, Denmark
SICAV: Saxo Invest
Promoter: Saxo Bank A/S, Hellerup, Denmark
Management Company:Universal-Investment-Luxembourg S.A.
Fund currency: Euro (EUR)
ISIN: LU0501220429
Fund category: Emerging Markets Debt
Management fee: 1,5% p.a.
Initial charge: Up to 5% –
Performance fee: 10% of the performance with high watermark
Min. initial investment: EUR 300

ABOUT GLOBAL EVOLUTION
Global Evolution is a dedicated emerging markets boutique with an established 10+ year track record and a tight-knit investment management team with an investment process that has been well-tested through various market cycles. The company has distinguished itself in the market with its singular focus on and long-standing expertise in the sovereign debt of emerging and frontier market countries. It is that focus and expertise, combined with a diversified style and active management approach and their unique proprietary systems for advanced portfolio and risk management, that have earned them industry recognition and accolades, including membership of JPMorgan’s EMBI & GBI-EM Index advisory committees.

ABOUT UNIVERSAL-INVESTMENT
With fund assets in excess of more than EUR 130 billion under administration, 1,100 funds and investment mandates and a workforce of around 380, Universal-Investment is the largest independent investment company in German-spoken Europe. The focus lies on the efficient and transparent administration of funds, securities and alternative asset classes. Universal-Investment is the central platform for independent asset management and combines the investment expertise of boutiques, private banks, international asset managers and investment firms to offer an exceptional collection of first-class private label funds. The hallmark of Universal-Investment is that it has no single company philosophy. This means investors can choose from a broad universe of mutual funds with a wide range of investment philosophies and styles. Universal-Investment was founded in 1968 as subsidiary of several well-known private banks. The company is headquartered in Frankfurt/Main and has subsidiaries and holdings in Luxemburg and Austria. As pioneer of the investment industry Universal-Investment is now market leader in the areas of master-KAG and private label funds. Members of the management board are Oliver Harth, Markus Neubauer, Stefan Rockel, Alexander Tannenbaum and Bernd Vorbeck (spokesman). (As per 30 June 2011)

Universal-Investment-Gesellschaft mbH
Am Hauptbahnhof 18
60322 Frankfurt am Main
www.universal-investment.com

Bernd Obergfell
Press Officer
T: +49 (0) 69 7 10 43-575
E: bernd.obergfell@universal-investment.com

This release was published on openPR.