James
Gard:
Welcome
to
Morningstar.
Today
I
am
with
fixed
income
analyst,
Elbie
Louw.
Elbie,
you’ve
recently
upgraded
the
people
pillar
rating
for
two
BlackRock
Emerging
Market
Debt
funds.
Can
you
tell
us
a
bit
about
the
background
behind
this
decision,
please?
Elbie
Louw:
Hi
James.
Thanks
for
having
me.
Yes,
in
January
2022,
we
saw
some
upheaval
in
the
sea
when
the
portfolio
manager
on
both
of
these
strategies,
Sergio
Trigo
Paz,
stepped
away
from
these
strategies,
as
well
as
his
role
as
head
of
the
Emerging
Market
Debt
team.
This
team
then
joined
forces
with
BlackRock’s
emerging
markets
crossover
team.
This
combined
team
was
then
further
led
from
that
point
on
by
Amer
Bisat,
who
previously
led
the
emerging
markets
crossover
team.
This
team
then
stood
at
a
healthy
number
of
22
members.
Now
that
kind
of
upheaval
often
causes
a
level
of
uncertainty
and
that
was
reflected
in
our
people
pillar
rating
of
average.
Gard:
I
see.
So,
to
me,
a
22-member
team
seems
quite
large,
but
you
say
this
is
a
strength
here
and
a
reason
why
you’ve
upgraded
the
people
rating.
So,
can
you
tell
us
a
bit
more
about
the
team
dynamic
there
and
the
key
personnel?
Louw:
Yes,
there’s
a
number
of
factors
that
contributed
to
our
upgrading
the
people
pillar
rating.
So,
first
of
all,
we’ve
seen
that
the
long-time
portfolio
managers
that’s
been
present
at
these
strategies
for
more
than
a
decade,
they
are
still
with
the
strategies.
On
the
Hard
Currency
strategy,
emerging
markets
bonds,
there
is
Michel
Aubenas,
and
on
the
Local
Currency
strategy
there
is
Laurent
Develay.
What
we’ve
also
seen
is
that
given
the
now
large
size,
which
you
rightly
flagged,
of
22
members,
they
are
able
to
spread
their
research
across
a
larger
cohort
of
analysts.
What
we’ve
also
seen
is
that
there
hasn’t
been
an
uptick
in
turnover,
which
we
also
view
positively.
And
lastly,
we’ve
seen
that
Amer
Bisat
has
started
to
contribute
to
the
investment
process
as
well
as
the
discussions
which
further
enhances
the
expertise
in
this
team.
Gard:
I
see.
So,
let’s
talk
about
performance
here.
Over
the
last
two
years,
how
the
fund
has
done,
and
I
believe
that
Latin
America
exposure
has
helped
improving
performance.
Louw:
Well,
you’re
right,
both
of
these
strategies
had
really
strong
performances
in
2022
as
well
as
in
2023.
If
we
first
focus
on
the
Hard
Currency
strategy
under
the
leadership
of
Aubenas,
in
2023,
that
strategy
managed
to
outperform
its
benchmark
by
roughly
600
basis
points
gross
of
fees
and
it
also
beat
roughly
90%
of
peers
in
its
Morningstar
category.
Roughly
half
of
that
outperformance
came
from
recovery
in
bonds
in
Venezuela,
but
that’s
a
position
that
really
(stagnated)
in
2018
and
in
2019.
And
then
we
also
saw
strong
performance
from
the
team’s
exposure
to
Argentina,
like
you
mentioned,
Latin
America,
and
we
also
saw
that
the
strategy
also
benefited
from
strong
duration
management
by
the
team.
Gard:
Sure,
that
makes
sense.
So,
what
about
the
Local
Currency
Fund
then?
Louw:
Similarly,
that
had
strong
performances
in
2023,
also
beating
roughly
90%
of
peers
in
their
Morningstar
category
and
outperforming
their
benchmark
by
roughly
400
basis
points
gross
of
fees.
At
this
strategy,
Latin
America
again
played
a
role
with
their
team’s
overweights
to
Colombia
and
Brazil
benefiting
with
strategy
on
the
back
of
monetary
policy
easing.
Their
underweight
stance
to
Turkey
in
light
of
really
high
inflation
there
was
a
further
contributor
and
then
there
was
also
small
trades
positioning
that
further
benefited
the
strategy.
Gard:
Great.
So,
these
strategies
look
like
ones
you
should
keep
an
eye
on
for
the
future
then
for
investors.
Thanks
very
much
for
your
insights
today,
Elbie.
We
look
forward
to
you
joining
us
in
the
studio
again
soon.
So,
thank
you
very
much.
SaoT
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