By Eric Fine
Portfolio Manager, Emerging Markets Fixed Income
&
Natalia Gurushina
Chief Economist, Emerging Markets Fixed Income
In a world that is worried about endless monetary experimentation and leverage in developed markets, but also looking for attractive yield, emerging markets may have answers.
The investment case for emerging markets (EM) debt is pretty compelling. First, in a world rightly concerned about excessive debt and insufficient yields, EM has an answer: EM governments are subject to debt constraints and pay market-determined yields. Second, we believe EM debt has “worked” for over a decade – we note that backward-looking efficient frontiers tell investors to have far more EM debt1 versus a current, average allocation of an institutional investor. Third, market structure in EM debt is characterized by liquidity, default rates and recovery values that are in line with many developed market (DM) bond markets.
Topics in this white paper include:
- EM vs. DM Debt – Better Fundamentals That Pay More Than DM
- Historical Performance Points to Very Large Allocations to EMD, Whereas Most Investors Have Very Small Allocations
- Structure of EM Debt – Liquidity, Default Rates, Recovery – Better Than the Image
- It’s Not Just You – EM Debt Should be Attractive to Global Investors
Recommended Insights: The Investment Case for Emerging Markets Debt. Download White Paper.
Originally published by VanEck on 31 January 2023.
IMPORTANT DISCLOSURES
1 Source: VanEck Research, Bloomberg LP. Data as of 2022.
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All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
