Webster adds Ukrainian bonds to Investec EMD fund

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Investec Asset Management’s Grant Webster has added a position to Ukraine within the £30.4m Investec Emerging Market Blended Debt fund.

Webster has been invested in Georgia for over a year but recently made the move to include Ukraine as well.

Overweight in relation to the benchmark, the fund has a 1.75 per cent exposure to Ukraine as of the end of April through a dollar-denominated bond.

Webster says: “On Ukraine, the country faces balance of payment stresses and has some heavy refinancing challenges ahead. However, we have been impressed by the government’s efforts to find a compromise with Russia which would allow them to reduce the price they pay for importing gas from the country.

”The country has also been in discussion with the IMF over a potential new deal, although we view this as less likely than a deal with Russia. Even so, there is some political risk in Ukraine which we continue to monitor.”

Webster additionally has a 0.85 per cent weighting in Georgia, which is also in a dollar-denominated bond, encouraged by long-term structural changes and democratic development in the country.

The manager has dedicated 50 per cent of the fund to local currency debt, expecting more local currency corporate bonds to be issued over the coming two years.

The fund is down 6 per cent over the three months to 6 June 2013, underperforming the 2.59 per cent average fall in the IMA Global Bonds sector. Performance has been hampered in recent weeks after Ben Bernanke suggested the Federal Reserve could start to slow its bond-buying programme.

Investec fixed income and currency strategist Thanos Papassavas adds: “I think personally the markets overreacted [off the back of Bernanke speech] and started anticipating a change in interest rates.

“I expect this to correct. The flows may be coming in the same way as the September 2011 correction, when flows were going out and then coming back straight away.”