First State Investments has announced the launch of the first fund to be run by its newly-formed Emerging Markets Debt team.

The First State Emerging Markets Bond Fund is to be run by Helene Williamson, who will be assisted by senior portfolio managers Jan Markus-May and Manuel Canas, and portfolio manager Phillip Fielding. 

First State announced the formation of the team just last week. Canas and May will concentrate on Latin America, while Fielding will focus on Europe.

A statement from the group said the fund's objective is ‘to achieve a combination of income and capital appreciation through investing predominantly in hard currency debt securities issued or guaranteed by governments, financial institutions or companies in emerging markets'.

It will maintain a portfolio of between 50 and 120 holdings and the team will examine the political and economic situations in specific emerging market countries before acting, the company confirmed.

Williamson believes the climate is right for investing in emerging markets and government bonds.

She said, 'Many bonds offer attractive value as credit spreads have widened substantially and emerging market currencies have cheapened due to contagion from the crisis engulfing the peripheral countries of Europe.

‘At First State we have a strong London-based investment team. We are further supported by experienced bond and credit specialists in Asia and Australia, who will help us to take advantage of market opportunities and deliver the performance our clients expect,’ she added.

Gary Withers, First State’s regional managing director for EMEA, added, ‘The ongoing sovereign debt crisis in the developed world has put a spotlight on emerging markets debt. We believe allocations to this asset class will continue to increase given the diversification and returns it offers. 

'Emerging market debt is coming of age as an asset class.

‘Clearly there is an element of political risk, some of these countries are fairly new to democracy, and the underlying economies are often significantly less mature and diversified than Western economies. But if you’re well diversified, most of the risk is mitigated,' he continued.