Performance

The Fund posted a positive return of +0.6%* in October, primarily driven by strong performance in emerging market bonds. Both sovereign and corporate EM debt benefited from improving risk sentiment and ongoing credit spread compression, which more than offset idiosyncratic pressures in select issuers. A modest decline in U.S. Treasury (UST) yields also provided some support, particularly in the longer-dated segment of the curve. UST yields exhibited a choppy pattern over the month, initially rising due to technical pressures and upcoming auctions but later falling as investors sought safety. The 10-year yield traded within a 4.15%–3.95% range, ending near 4.08%. Demand for safe-haven assets was bolstered by renewed concerns about U.S. regional banks, escalating U.S.-China tensions, and geopolitical instability in Europe and Japan. The U.S. government shutdown limited the availability of key macroeconomic data, further encouraging defensive positioning. While new U.S. sanctions on Russia briefly stoked inflation concerns through higher oil prices, a delayed CPI release showed softer-than-expected inflation, reinforcing expectations for further Fed rate cuts. Toward month-end, the Federal Reserve delivered a widely expected 25 bps rate cut, but Chair Powell’s cautious tone and emphasis that further easing was “not a given” triggered a rise in yields, limiting the broader bond market’s gains. In October, the Fund saw a redemption of Namibia bonds and participated in a tender offer from a Turkish issuer. The proceeds, along with available cash, were reinvested into higher-rated bonds from developed markets, with an average duration of five years. As of month-end, the Fund maintained an average duration of 5.9 years and an average yield-to-maturity of 5.7%. * Net performance, B1 shares.