INSIGHTS

EMD – an asset class grows up

In EMD – an asset class grows up, we reaffirm that emerging markets debt has a place in diversified portfolios. We explore the evolution and trends of the asset class and provide our views on local currency, hard currency and blended currency strategies. Lastly, we show the benefits of implementing blended currency strategies.

  • We believe that EMD has a place in portfolios. The asset class continues to look attractive in this persistently low-yield environment. Relative valuations versus the rest of the global fixed income opportunity set, coupled with low inflationary pressures and improving fundamentals across the globe paint a rosy picture for emerging markets.
  • We believe that local currency EMD presents a compelling opportunity for investors compared to hard currency or developed market credit. For those investors wishing to minimize their volatility, blended strategies can provide investors exposure to EM rates, EM FX and EM credit often with lower volatility.
  • We believe that allowing managers the ability to allocate to local and external debt based on relative value will give investors the best experience in the asset class.