J Stern & Co has announced plans to launch the Emerging Market Debt Stars fund, which aims to provide investors with a 5-6% return through emerging market company bonds.

The new offering will invest in corporate bonds only and will eliminate currency-exchange and local liquidity risks via hard currency bonds, mostly in US dollars.

Based on the group's already established emerging market debt strategy, the Stars fund will follow an unconstrained approach, with a focused portfolio consisting of 30 to 50 quality issuers.

Investee companies will have strong competitive positions, operating in growing industries, with predictable cash flows, the financial strength to weather adversity, access to multiple sources of capital and strong management teams.

The fund will be managed by Jean-Yves Chereau and Charles Gelinet and will have a dedicated team of five investment professionals, including an ESG analyst.

J Stern & Co will initially target the fund at intermediaries and DFMs, wealth managers, private banks and family offices. Set up as a Luxembourg UCITS, it will have an annual management fee of 0.9%.

Chereau said the market repricing experienced this year has led to higher yields in fixed-income assets.

He said: "We believe this presents an attractive entry point for long-term investors to buy and hold bonds from companies with solid underlying fundamentals, delivering generous income (and total returns) in an environment where the global outlook is uncertain."

Gelinet added: "Whenever emerging market corporate debt is discussed, many investors associate it with emerging market sovereign debt. However, the risk/return profile of sovereign debt is very different to that of emerging market corporate debt.

"Investors in emerging market corporate debt are paid a higher yield for investing in companies based on the rating of the country they are based in, even if they are global companies with diversified sources of revenue and strong fundamentals.

"Our experience demonstrates that quality companies with strong and sustainable competitive positions, generating predictable cash flow, are in a solid position to repay the debt, regardless of their location."