Unveiling the value of EM debt

We believe Emerging Markets Debt (EMD) should serve as a core allocation in investors’ portfolios. The asset class has traditionally been perceived as a tactical investment opportunity or as an off-benchmark allocation. Instead, we believe a favourable macroeconomic outlook, the growth and transformation of the universe and the diversification benefits it offers means EMD should be a core allocation in investors’ portfolios.

Unveiling the value of EM debt

From a macro standpoint, EM countries account for over half of global GDP and they should lead the next recovery as Developed Markets (DM) face a slowdown. These economies have matured over the last three decades and, in recent years, strong growth, improving macro fundamentals and orthodoxy in monetary policy coupled with shifting supply chains have led to a re-rating in their risk profiles.

The EM bond universe has also evolved accordingly given its growing market size, the increasing number of issuers, and the growing green, social, sustainable and sustainability-linked bond market, thereby offering investors a composite asset class with greater liquidity and transparency.

The asset class provides attractive yields, a compelling risk-return profile and a diversified income source compared to traditional fixed income, with the potential for growth from a wide range of regions, countries and companies that exhibit lower correlation to global equities and bonds.

You can now read the full whitepaper at the link below