Emerging Market Debt

Why a blended approach?

Emerging market debt (EMD) is relatively under-researched and we believe its market inefficiencies are greater than for many other asset classes. To maximize the opportunities, a ‘best ideas’ approach to blended EMD avoids exposure to a single theme, country or economic outcome.

Mar 17, 2021

10 minutes

Grant Webster
Roger Mark
Emerging market debt (EMD) is relatively under-researched and we believe its market inefficiencies are greater than for many other asset classes. To maximize the opportunities, a ‘best ideas’ approach to blended EMD avoids exposure to a single theme, country or economic outcome.
Lower debt, superior yields and a strong long-term growth outlook make EM economies attractive to bond investors on an absolute basis and relative to developed markets.

We examine the relative merits of a best ideas vs. a fund-of-fund approach to EM debt and explain why we think the potential benefits of the asset class can best be gained from a best ideas blended debt strategy that tracks a blended benchmark, dynamically shifts its asset allocation and does not contain disproportionate hard currency debt exposure.

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General risks

All investments carry the risk of capital loss.

Grant Webster
Portfolio Manager
Roger Mark
Analyst

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