Excel EM Capital Income Fund

As at April 30, 2012

Following a positive first quarter, external and local debt markets appreciated in April. External debt markets were up 1.63% while sovereign spreads did widen slightly from 330 to 339 basis points over the US treasury yield, curve. This indicates that the strong demand for US treasuries in response to increasing developed market risk premiums contributed to external debt performance. However, the relative stability of the sovereign spread over this period highlights that, despite a poor month for developed market credit and equities, emerging debt remained resilient. Over the month, local debt markets outperformed, with the JPM GBI-EM Global Diversified unhedged in USD appreciating +0.96%, but by +1.18% in local currency terms. The slightly lower performance of the benchmark when valued in USD highlights that in general terms, emerging currencies out performed developed currencies. Within the emerging currency universe, there was a split in terms of performance; emerging European currencies underperforming vs. developed currencies, while emerging Asian currencies out performed developed currencies. The performance of Latin American currencies was broadly mixed.

Current Positioning:
Having chosen to position the portfolio more defensively at the start of Q2 we maintained the overall risk profile of the fund. Having modified our overweight external debt position to be more in line with the benchmark weight at the start of the month we remain true to that purpose. Emerging currency positions
remain at or close to benchmark weights. By keeping our external debt exposure broadly in line with the benchmark and remaining

 

 

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