Chile Fund Manager Is In Demand As Decade's Best Performer
Vivid sunset over the Andes Mountains and Atacama Desert, Chile.

Investors searching for both yield and safety have been piling into emerging-markets debt funds for the past several years.  The universe of EM debt has more than doubled since 2007, and at US$ 8T is now larger than the entire global investment-grade corporate bond market (US$ 7.6T).  Credit quality for the largest EM corporates has improved substantially; back in 1998 over 90% of EM corporates were rated as ‘high-yield’, or below investment grade. According to Bank of America Merrill Lynch, that number has now dropped to less than 40%.

Bloomberg surveys 436 emerging market funds that have been operating for at least a decade.  Of those, Moneda Asset Management in Santiago, Chile leads the field.  The firm, which manages just under US$ 5bn in assets, runs a high-yield debt fund that returned 9.2 percent in the past year and has appreciated 206 percent in the past decade.  This May a Canadian pension fund invested US$ 100m into the Moneda fund. The announcement was made shortly after the Chilean government announced a reduced tax scheme for foreign assets invested with local money managers, as part of a plan to promote Santiago as a regional financial center.

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