MERCER EMERGING MARKETS DEBT FUND
With con nued strong economic growth in emerging markets, plus associated improvements in credit worthiness, Emerging Markets Debt (EMD) is increasingly being recognised as an a rac ve diversifier to sovereign bonds issued by developed economies. Mercer offers local investors a means to gain access to this opportunity by “feeding into” an exis ng, established European Mercer fund - the Mercer Emerging Markets Debt Fund (the Fund).
EMD is fixed interest securi es issued to investors by governments of developing countries. Interest is paid to the investors over the life of the investment, usually at a fixed rate and the capital is returned at expiry.
These investments can generally be bought or sold before they mature, resul ng in capital gains or losses caused by changes in the market interest rates at which the investments are valued. The underlying strategies will primarily invest in debt issued in local currencies and will be unhedged, adding an element of return (and risk) to the por olio.
EMD returns can generally be expected to be more vola le than investments in sovereign bonds issued by developed na ons, but less vola le than shares and property.
INVESTMENT OBJECTIVE The Fund is designed to provide investors with a diversified por olio of primarily local currency emerging market debt (EMD) assets and strategies, with the aim being to outperform the benchmark over periods of one year or greater. Responsible En ty Mercer Investments (Australia) Limited (MIAL) BENCHMARK Style JP Morgan GBI-EM Global Diversified Index. Mul -manager
Investment Timeframe INVESTMENT STRATEGY 5 years plus The Fund invests in overseas assets using a mul -manager approach, with ac ve management by a number of EMD managers highly rated by Mercer. The Investment Vehicle manager line up aims to provide a more consistent level of outperformance than Fully distribu ng unit trust would typically be provided by selec ng a single ac ve EMD manager over the long term. This document is issued by Mercer Investments (Australia) Limited ABN 66 008 612 397 (MIAL), Australian Financial Services Licence #244385. MIAL is the Responsible En ty of the Mercer Mul -Manager Funds ‘MERCER’ is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. INVESTMENT MANAGERS
NOTE: Investment managers and their alloca ons can change from me to me. Weigh ngs may be subject to rounding errors.
BlackRock Investec Asset Management Stone Harbor Investment Partners
Target Target Target Management Style Management Style Management Style Weight Weight Weight Ac ve, thema c 22.0% Ac ve, fundamental/dynamic 26.5% Ac ve, fundamental 25.0%
BlackRock Investment Management § Specialist unit within Investec that can § Focused fixed income firm (Australia) Ltd (BlackRock) is a subsidiary of draw upon the firm’s resources in § Long-standing team with experience over US-based BlackRock Inc., a global provider commodi es, South African and fron er market cycles and events of investment management, risk equity and corporate bond teams management, and advisory services, § Main sources of alpha from country and § Strength of currency models and country founded in 1988. In Australia, BlackRock currency scorecard and its predecessor firms have been § Increasing emphasis on EM credit providing investment management Investec Asset Management was established Stone Harbor Investment Partners (Stone services since 1979. The BlackRock group in South Africa in 1991 by the Investec Harbor) was founded in April 2006, as the has investment management teams Group, and remains a wholly-owned successor organiza on to the US-based fixed covering all major asset classes, across subsidiary of the Group. many investment styles and regions income division of Ci group Asset Investec believe that fixed income market around the globe. Management (CAM). Most of the former valua ons are driven by economic BlackRock’s Emerging Markets Debt Ci group team moved over to the new fundamentals over the long-term. However, capability leverages the broader resources organiza on. Stone Harbor is 100% they believe that in the short-term prices will of BlackRock, including risk resources, employee owned and headquartered in New vary considerably from fair value, providing thought leaders and its global network of York with an addi onal office in London. opportuni es for an ac ve manager to out- investment professionals. Stone Harbor philosophically believes in perform. A thorough analysis of three diversified por olios, applying a benchmark- BlackRock’s strategy applies a thema c, factors, which Investec call 'Compelling aware approach to the ac ve management forward-looking approach to Forces' - economic fundamentals, valua ons of emerging markets debt that is focused on inves ng. The investment process is and market price behaviour - can highlight country and currency selec on as the main intended to be comprehensive and opportuni es and associated risks. dynamic, based on a combina on of global source of added value, and sector rota on The Investec fixed income team holds a factor analysis, fundamental analysis and and issue selec on as secondary sources. monthly economic scenario mee ng to local idiosyncrasy understanding, which The process incorporates a combina on of discuss fundamental factors affec ng the enables the team to constantly extract quan ta ve and qualita ve research. developed economies of the world. This is investment themes from relevant market The outlook of Stone Harbor's Investment followed by an asset alloca on mee ng to drivers. Policy Commi ee (IPC) is the star ng point discuss the market’s appe te for risk. The strategy also leverages BlackRock’s for investment ideas and por olio The team adopt a scorecard approach that local market intelligence network. Using construc on. Using IPC output as a guide, reflects their 'Compelling Forces' philosophy, fundamental analysis as a base, the the emerging markets debt team broadly tailored to take account of the key drivers of investment process also relies on market frames por olios in terms of ac ve risk, emerging markets. The scorecards are a mix intelligence and research performed on sector alloca on, and exposure to IPC- of quan ta ve and qualita ve factors, but the ground. iden fied investment themes. ul mately Investec apply judgement to determine the final posi on. Por olios are constructed by bringing together the scorecard outputs. Wellington Management
Target Management Style Weight Ac ve, fundamental 26.5%
§ Stable, privately-owned investment manager § Macro economic views to iden fy secular trends, rela ve value and cycles § Mul ple sources of alpha from country, rate, credit and currency Wellington Management is a large, independent global investment manager that traces its history to the 1928 forma on of America's first balanced mutual fund. Based in Boston, Massachuse s, the firm has offices around the US and the world, including Beijing, Hong Kong, London, Singapore, Sydney and Tokyo. Wellington Management is a private partnership and all of its partners are ac ve in the The underlying investment firm. managers are the same Wellington believes emerging debt markets are inefficient, managers used for the Emerging and inefficiencies can be exploited through the use of Markets Debt Fund managed by proprietary, fundamental research. The team employs a benchmark-rela ve approach to managing emerging Mercer in Europe. market debt, with diversifica on considered a key tenet of risk management. Wellington Management believes that emerging markets must be approached from a global perspec ve, so its emerging markets debt team is fully Investment managers’ target integrated with its global fixed income team. alloca on (“weight”) of Fund assets The investment process begins with a thorough assessment of the global economy, crea ng a broad view Wellington BlackRock in terms of secular trends, rela ve value and economic Management cycles. The resul ng market outlook is coupled with bo om-up, emerging market country analysis to set the overall risk level of emerging market debt por olios rela ve to the index. At the country level, Wellington quan ta vely and qualita vely analyses the drivers of economic growth, infla on, poli cal condi ons, fiscal and monetary policy implementa on, and interest rates to assess general balance sheet strength and probability of default. Investec The most a rac ve securi es fi ng the desired risk profile Stone Harbour Asset Investment are purchased, and sold when fundamentals deteriorate or Management Partners be er opportuni es exist.
NOTE: Investment managers and their alloca ons can change from me to me. Weigh ngs may be subject to rounding errors. FOR FURTHER INFORMATION t: 1800 512 947 e: Pacifi[email protected]
Investors should be aware that the value of an investment in the Mercer Mul -Manager Funds (Funds) may rise and fall from me to me and that neither MIAL nor Mercer guarantees the investment performance, earnings or return of capital invested in the Funds. If you are inves ng directly into the Funds, you will need to complete an applica on form included in, or accompanying, a current Mercer Mul -Manager Funds Product Disclosure Statement which is issued by and available from MIAL. If you are inves ng indirectly into the Funds through an Investor Directed Por olio Service (IDPS) or an IDPS-like service (such as a master trust, wrap account, custody or nominees service) (Service) you will need to complete the forms or documents your Service provider requires. The informa on contained in this flyer includes general financial product advice which does not take into account the personal objec ves, financial situa on or needs of individual investors. It is important that you consider these ma ers, read the Funds' current Product Disclosure Document if you are inves ng directly; or current Product Disclosure Statement for the Funds, issued by MIAL, together with the Product Disclosure Statement and/or any other offer documents applicable to your Service (available from your Service provider) if you are inves ng indirectly into the Funds through a Service, and obtain personal financial advice from a licensed or appropriately authorised financial adviser. You should also remember that past performance should not be relied upon as an indicator of future performance.
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