Rathbones' Jones makes tactical bet on EM debt as spreads widen

Bryn Jones and David Coombs have bought into emerging market debt in the Rathbones Strategic Bond fund for the first time in 12 months after spreads widened significantly during the recent sell-off.

The managers were waiting for spreads on emerging market bonds to hit 400bps before they bought back in, a huge discount to levels seen during more normal trading conditions. The duo eventually re-entered at 397bps in early February as the flight out of emerging markets showed no sign of letting up. Jones (pictured) said: "It is a trade based on valuations, not a significant improvement in fundamentals. “We have been underweight EMD and we will not buy into it aggressively because we do not know the source of the panic in emerging markets. But we have allocated 1% of the fund to EM...