Chilean fund manager Fernando Tisne is delivering the world’s best emerging-market bond returns as he profits from distressed and junk-rated Latin American corporate debt.
His $980 million Moneda Deuda Latinoamericana fund returned 371 percent in the past 10 years, trouncing 439 emerging-market debt funds with more than $100 million in assets, including the 178 percent gain for the $7.2 billion Pimco Emerging Markets Bond Fund, according to data compiled by Bloomberg. The fund has also gained 14.7 percent in the past year, more than Pimco’s 10.8 percent return and higher than the 9.5 percent average.
Tisne, 42, has become the most successful debt investor in emerging markets over the past decade because he’s been willing to pile money into the bonds from Latin American companies that haven’t been analyzed and graded by credit-ratings firms. While his two biggest holdings, in state-owned oil producer Petroleos de Venezuela SA and Mexican cement maker Cemex SAB de CV, have returned at least 23 percent in the past year, Tisne is also the biggest bondholder in 21 of the 22 unrated notes that his fund owns, according to regulatory filings.
“We have had the same team managing the fund all along, which allows us to really get to know the companies,” Tisne, who started the fund in February 2000 with $15 million, said in a telephone interview on March 19. “We do have some lesser- known and less-liquid companies. A lot of companies we have known for 12 years and watched how they lived and survived.”
“It allows us to make good decisions quickly,” he said. “It’s a combination of clipping coupons and capital gains -- buying cheap bonds.”
Mark Porterfield, a spokesman for Newport Beach, California-based Pacific Investment Management Co., didn’t reply to phone and e-mailed messages seeking comment. Bill Gross and Mohamed El-Erian are co-chief investment officers of Pimco, the world’s biggest bond fund manager.
Adjusting for price swings, the Moneda Deuda Latinoamericana fund’s 52 percent return was also the best globally, data compiled by Bloomberg show. Risk-adjusted returns are calculated by dividing total return by volatility, or the degree of daily price variation.
Tisne joined Moneda Asset Management in 1994 as an equity analyst after graduating with a business degree from Chile’s Pontifical Catholic University in Santiago. The company was founded a year earlier and ran a small- to mid-cap Chilean equity fund before adding debt investments. As of the end of January, the Moneda fund had 30 percent of its assets in Brazil, 27 percent in Mexico and 10 percent in Peru.