Schroders has launched a new emerging markets funds which aims to generate a high level of income through investing in a mix of emerging market sovereigns and corporates, along with developed market high yield bonds.

The fund’s assets will be actively allocated between these three high yield fixed income sectors, and its managers will also employ active currency management, the firm said. Coordinating the management of the fund will be global bond fund manager Warren Hyland, who will be supported by the firm’s wider fixed income team, which comprises some 25 credit analysts and 30 portfolio managers.

Schroders notes the rising popularity of emerging corporate bonds due to their lower level of leverage compared to those of developed markets, their attractive valuations, the prevalence of strong growth stories and improved risk appetite among investors. It also foresees a strong year ahead for high yield credit due to an improving economic backdrop, solid credit fundamentals and strong demand.

“As the credit market recovery that began in 2009 matures with interest rates near historic lows, investors are increasingly looking for a risk-controlled way of generating high income. We believe a disciplined, multi-strategy approach is the most prudent answer,” said Karl Dasher, global head of fixed income.

“This fund combines the expertise of more than two dozen credit research professionals in Asia, Europe and the Americas; specialist high yield credit portfolio managers experienced in navigating credit cycles; and emerging market specialists who understand the investment terrain within those markets.”