Rose Choy, who is currently managing the PCIIM Emerging Markets Bond Fund, has five years of experience in the fixed income field. Prior to PCIIM, Choy's past experience was in the high yield and distressed debt fields at Citigroup in New York and with Carl Marks, a distressed debt fund based in New York.
Interview with Rose Choy
- Can you first give us a brief outline on the key individuals at PCI Investment Management Limited?
Herman Fung is the managing director of PCIIM. Fung has over 20 years of experience in the financial services industry, including nine years with Wardley Investment Services (HK) Limited (now HSBC Asset Management Limited) where he was executive director and head of fixed income department in London and Hong Kong offices. Thereafter, Fung spent seven years with Goldman Sachs (Asia) LLC as executive director of fixed income. Prior to joining Wardley Investment Services in 1979, he worked for W.I. Carr Sons & Company responsible for Hong Kong equity research and analysis.
Walter Wu is the executive director of PCIIM. Wu began his investment management career in London at Gartmore Investment Management Limited and subsequently joined Midland Montagu Asset Management Limited where he was responsible for investment trusts and pension fund management in Far Eastern equities. In 1991, he returned to Hong Kong and became investment director for BZW Investment Management Limited. Wu became an independent fund manager in 1993, during which he transformed AsiaInvest Consultants Limited to become a fund management company providing investment management services on Asian equities for institutional investors. Prior to establishing PCIIM, Wu founded AR Asset Management (HK) Limited specialising on absolute return investment mandates in Asia.
- You launched in January this year. How has Q1 been for you?
With the 1st quarter not quite over yet, the PCIIM Emerging Markets Bond Fund has delivered a year-to-date return (as of March 17) of 3%. Emerging markets as an asset class have been performing well this year although not without its volatility. From the end of January throughout February, the market was relatively volatile as market participants reacted to the January FOMC meeting and political scandals in Brazil.
- Which markets have you found the best returns and what has been your regional exposure so far?
We find Asia and Eastern Europe to have good risk-adjusted returns this year. Our exposure to Asian bonds and Eastern European bonds are about 50% and 40% respectively.
- Global interest rates are starting to rise and it looks like the Fed will increase interest rates on the US dollar. What is your outlook on this and how will it affect the performance of your fund?
We believe that interest rates will have to rise eventually. However, as the employment picture in the US is still rather sluggish and inflation remains subdued, we do believe that the Federal Reserve will truly be patient in raising rates this year. Apparently, when interest rates do rise, global liquidity will eventually dampen and the markets can become even more volatile. However, we have the ability to hedge against interest rate risks and credit risks in our fund, so we are prepared for a rise in yields.
- Can you give a rough breakdown of the maturity spreads of the debt instruments that you hold as of now?
About 60% of our portfolio has duration of less than seven years and the remainder has duration of over ten years.
- Is there a master/feeder arrangement between this fund and the global fixed income fund or are they managed separately?
No, there is no master/feeder arrangement between the two funds. They are managed separately.
- Do you employ automatic stop-losses and if so what are they? What other risk management measures do you implement to avoid large drawdowns?
No, we do not have automatic stop-losses. However, we have an in-house risk management system to monitor our portfolio. If needed, we can use interest rate or credit derivatives to hedge our portfolios in order to minimise large drawdowns.
- And lastly what is your capacity and how are you intending to attract investors in 2004?
We don't plan to soft close the fund.
Rose Choy, Senior Investment Analyst
+852 2918 2101