Emerging Market Debt (EMD) is a rapidly evolving asset class that aims to offer investors diversification benefits, enhanced yield and return potential. The increasing importance of emerging market countries to global trade and GDP elevates the attraction of EMD and we believe it should be an integral part of investor portfolio
EMD Local Currency Sovereigns
EM local currency debt provides investors with yield enhancement and diversification benefits and is increasingly considered an integral part of an investors’ overall asset portfolio.
EMD Hard Currency Sovereigns
EM hard currency debt offers investors a diversified source of yield enhancement for a mixture of investment grade and high yield emerging market sovereigns and is increasingly considered an integral part of an investors’ overall credit portfolio.
Emerging Market Hard Currency Corporate Debt
Hard currency corporate debt is a younger and fast-growing part of the EMD investment universe, offering investors significant diversification benefits and yield enhancement with a lower duration compared to hard currency sovereign debt. Hard currency corporate debt also provides the most diversified exposure in the asset class.
Emerging Market Local Currency Inflation Linked Debt
Inflation-linked EMD offers investors an interesting and complimentary exposure for their fixed income portfolios. Inflation-linked strategies in EMD can provide investors with a form of insurance, or hedge, against both ‘expected’ and ‘unexpected’ inflation and are particularly popular with domestic investors in the major EM markets.
1 Source: State Street Global Advisors as at 31 December 2022.
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