For 14 years, Adelante Asset Management's long-biased strategy paid major dividends in emerging markets. But no more.
The London-based firm closed its Emerging Debt Fund at the end of July and returned its US$80 million to investors. The fund follows Adelante's emerging markets stock fund, which it shut several months ago, into the dustbin.
"We believe our investment style is not suited to the current and foreseeable environment," CEO Julian Adams told Financial News, citing the recent sell-off in emerging markets debt, fears that the U.S. Federal Reserve is about to cut back on its bond-buying program and currency difficulties, now exacerbated by the crisis in Syria.
"The words 'fixed-income' and 'emerging markets' are not very popular this year," he said. For Adelante's strategy to work, emerging markets debt needs to "come good," he said, something that he could not foresee.
The Adelante Emerging Debt Fund has enjoyed annualized returns of 15.4% since its debut in 1999, but lost about 2% this year.