Barings converts income fund to emerging market debt offering to meet rising demand

Barings is to convert its Emerging Market Income fund into an Emerging Markets Debt Local Currency fund to meet increasing investor demand for the asset class.

Barings will change the name and investment strategy of the $75.3m (£51.7m) Dublin-domiciled fund before soft-launching it on June 17.

Emerging Market Income was originally launched in December 2006.

The fund’s current manager, Ece Ugurtas, will be replaced by head of fixed income and currency Alan Wilde until a permanent manager is appointed. Ugurtas will focus on the $314.9m High Yield Bond fund, which she also manages.

As of last month, Emerging Market Income already had 86.8% of its assets invested in local currency debt from Brazil, Hungary, Mexico, Poland, Indonesia and Turkey. However, Barings says it chose to move to a pure emerging market debt strategy to cater to the growing demand from investors.

Interest has primarily come from the institutional space, but Barings will begin marketing the fund to retail investors in late 2010 or 2011.

“We have converted this fund to a pure local currency Emerging Market Debt fund in response to demand from some of our institutional clients,” says marketing director Ian Pascal.

“This fund complements our large range of highly regarded emerging market equity products and, in the longer term, we plan to actively promote it into the retail market, once we have established a solid performance track record.”

Emerging market debt has been steadily gaining traction in the UK retail market with Baillie Gifford, M&G, Threadneedle and Investec all having launched funds covering the asset class in the last four years. Aberdeen is also planning to launch a UK-domiciled version of its $373.6m Emerging Markets Bond Sicav later this year.

The Investec Emerging Market Debt fund, which launched in June 2006, has seen assets under management rise from £68.5m to £834m over the year to April.