Emerging Market Debt (EMD) is a rapidly evolving asset class that can offer fixed income investors diversification benefits and enhanced yield and return potential.
The EMD universe offers investors a broad spectrum of opportunities from local to hard currency debt, from investment grade to high yield, and from sovereign to corporate debt. Investors can pick and choose their exposure depending on the risk and return profile they are looking for.
EMD has seen solid growth over the past decade, as of end June 2020 the investible EMD universe in hard currency sovereign, corporate debt, local currency nominal and inflation linked sovereign debt stood at $5.5 trillion based on the flagship JPM and Barclays indices.1
As emerging market countries grow and develop their financial markets, new countries are added to the flagship EMD indices.
With EM countries increasing importance to global trade and GDP, EMD cannot be ignored and at State Street Global Advisors we believe it should be an integral part of investor portfolios.
Emerging Market Debt : Cautious Optimism
Emerging bond markets have rallied strongly since the sharp drawdown last year. Valuations have recovered even as some fundamentals – such as debt sustainability and fiscal discipline – have become challenged. But while the start of 2021 has shown that smooth sailing cannot be guaranteed, there are reasons to remain optimistic towards EMD.
For more yield, albeit with more risk, EM Debt is the place to go. EMD is a versatile asset. Its low correlations with global equities and global bonds make it a welcome addition for both global equity and debt investors.
Emerging market debt (in USD terms) experienced a good April, supported by a partial retracement in cross-market volatility, improvement in EM currencies’ carry-to-vol ratios, and stabilization in US rates.
First Index EM Local Debt Strategy (Including China Onshore Bond Market)
First Indexed Global EM Local Debt Strategy (ETF)
SPDR® BofAML Emerging Markets Corporate Bond Strategy
Custom Indexed Middle East (UAE) USD Sovereign & Credit Strategy
Multi-Factor EM Local Debt Strategy
Indexed Local EMD SICAVs including ESG versions
State Street Global Advisors is leader in EMD investing and a pioneer in indexed EMD launching our first indexed strategy in 2005.
Today we manage over $24bn2 in dedicated EMD portfolios and are among the largest EMD investors in the world.
We manage assets across local currency nominal and inflation linked debt and hard currency corporate and sovereign debt.
Global expertise, local knowledge – two EMD investment centres located in London and Singapore
Our approach to indexing has delivered close tracking while reducing implementation costs and has been recognised by institutional and retail investors alike.
Our dedicated EMD team means that we have the expertise to deliver this complex beta exposure in an efficient and cost effective way.
We have a solutions oriented approach and work in partnership with institutional investors to meet their investment objectives.
Our Emerging Market Debt strategies aim to deliver the performance of all the major EMD benchmark indices through the use of sophisticated investment techniques.
Through our long-standing track record, across the full EMD spectrum, we have accumulated deep market insights and expertise of how these markets operate and perform.
We manage a variety of funds and ETFs as well as separately managed accounts that track the performance of the established institutional EMD benchmarks, as well as customised versions of these. We have considerable experience partnering with our clients to design the specific EMD exposure and strategy they want, one that is consistent with their own investment objectives and beliefs.
We have established track records against four key EMD exposures:
Investing involves risk including the risk of loss of principal.
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The views expressed in this material are the views of the EMEA Fixed Income Specialists of State Street Global Advisors Global Fixed Income Group and are subject to change. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
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