In 2018, one issue for emerging market (EM) debt was that growth was very unipolar: we had decent growth out of the US but it was fairly lacklustre in Europe. This was partly due to a succession of special factors: new pollution regulations knocked the car industry, low water levels in the Rhine impacted manufacturing and yellow vest protests in France were widely disruptive. The Brexit fiasco has not helped, either.
Although a fixed income asset, the structure of convertible bonds provides a natural asymmetry that has the potential to deliver long-term equity like performance.
GAM Systematic’s Anthony Lawler explains how investors can seek to diversify their portfolios at a time when valuations in both equity and bond markets are beginning to look stretched.
It is often said that history does not repeat, but it rhymes.
The universe of EM equity is extremely diverse. Listed within this same category are countries whose economic cycles are not at all related and whose markets are exposed to a great diversity of factors.