Pictet-Global Emerging Debt HR EUR

Analyst Report
Morningstar's Take

by Shannon Kirwin

Since a personnel shakeup four years ago, this team has been strengthened and cooperation has been enhanced, meriting an upgrade of Pictet-Global Emerging Debt's People Pillar rating to Above Average from Average. Its cheapest HZ and A1 share classes earn Morningstar Analyst Ratings of Bronze, while its remaining share classes are rated Neutral. Mary-Therese Barton, a member of Pictet’s emerging-markets debt team since 2004, took over leadership of the group in May 2018 when previous longtime team leader Simon Lue-Fong left the firm. The handover coincided with a patch of weak performance, as well as the departure of three other experienced team members. Since then, Barton has filled the vacant positions with seasoned hires and added a macro and quantitative strategist to the roster. Turnover has since stabilized, with no further departures from the firm since 2018. This group of eight portfolio managers and two strategists boasts an average of 19 years’ investment experience. This remains a team-oriented approach, but Barton has made some enhancements. The investment team meets daily to discuss its macro views, bottom-up country picks, and overall portfolio positioning, and all eight portfolio managers in the group contribute investment ideas to the hard-currency, local-currency, and blended strategies in their lineup, as before. However, Barton broke with tradition in appointing two team members as lead day-to-day managers here. Pictet's emerging-markets debt team veteran Guido Chamorro and newer arrival Robert Simpson (who joined in 2020) keep an eye on the portfolio’s overall risk profile, though most trade ideas and the overall direction of the portfolio are hashed out in group discussions led by Barton. In the four years since these changes went into effect, this team has demonstrated skill in a range of different market environments. The managers kept a lid on losses during the 2020 first-quarter coronavirus-driven selloff thanks to an off-benchmark short position in emerging-markets currencies, then outperformed their JPM EMBI Global Diversified Index benchmark as the market rallied in the year’s second half thanks to a timely pivot to a more-aggressive stance. Though the team’s country picks were less successful in 2021, their effective duration management and underweighting in Russian debt has shielded investors from the worst of their market’s selloff so far in 2022. In the roughly four years since Barton took over the team, this fun’s I USD share class has outperformed its benchmark by 1.0% annually, a result better than 90% of peers’.

Morningstar Analyst Rating™
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Portfolio RoleGiven the numerous risks inherent to emerging-markets debt, strategies like this one are best suited to play a supporting role in a well-balanced portfolio.
Morningstar Pillars
The firm has many strengths, but we believe there are still areas for improvement.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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