“We went from feast to famine, depending on whether the country was doing well or if you had a recession. It was almost like a test case of a company trying to survive in a very difficult, unpredictable macro-environment.
Location, location
“As a citizen, I thought this was fascinating. I wanted to study economics because observing what was happening and reading the newspaper was not enough.”
But studying economics was only a first step. After Calich graduated from university in New York, she joined Invesco as head of emerging markets in 2004.
There she led a small team doing a very similar role to her current position as fund manager of the M&G Emerging Markets Bond Fund, which she took in 2013.
So if the jobs are so similar, why the move? For Calich, joining M&G was down to location. Invesco wanted to centralise the fixed-income team in its US headquarters in Atlanta, Georgia.
“Atlanta is just not for me. I chose to move to London – a place that fits my life-style better and is also much better for emerging markets. I have been here for two and a half years.”
The fund has a flexible mandate coverering a broad range of sovereign, corporate, hard and soft currencies, which has managed to outperform the sector since Calich took over. It even managed positive returns in a challenging environment on a one-year view.
She says a key driver to performance has been the asset allocation calls made at a top-down level: “In this period since joining, we have had quite a bit of underperformance by local currencies versus the dollar. Most of the fund has been in hard currency, by which I mean dollar exposure in emerging markets.”
Some local currencies are ‘more atttractive’
But she adds that some of the local currencies are becoming attractive again due to the levels of depreciation to date, and as current account deficits in a number of countries have started to shrink.
One example of a currency play Calich instigated was adding exposure to the Indonesian rupiah as soon as she took over the fund.
“At the time, the yields were much higher. The central bank has been cutting rates since then but I thought they had already been quite a reduction in Indonesia’s current account deficit. You have a very credible central bank, a growing economy and there is no problem in funding this small current account deficit.
“It is also a net commodity importer, so Indonesia really benefited from oil price moves. That was one of the few currencies I have had throughout the whole time, so a two-and-a-half-year exposure.”
Another currency she highlights is a 2% exposure to the Russian rouble, which was added for the first time in January.
“We have seen a massive adjustment in the rouble, a lot of which is, in my view, the right response to the low oil prices.
