- Aberdeen Asset Management
- Emerging Market Debt
- The Case for Emerging Market Debt
“Over the last decade the emerging market debt universe has undergone rapid growth and is becoming more important to a wide range of investors.”
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The Case for Emerging Market Debt
Over the last decade the emerging market debt universe has undergone rapid growth and is becoming more important to a wide range of investors. The reasons behind this are:
- Improving credit quality has led to greater liquidity - Many emerging market countries have implemented sound fiscal and monetary policies. As a result the credit quality of the asset class continues to improve making it a more mainstream asset class.
- Significant diversification benefits - Emerging market debt, both hard and local currency, offers low correlation to developed markets and emerging market equities and suggests that it has a valuable role to play in portfolio diversification, particularly for portfolios that already have significant stock allocations.
- Increased independence - Developing countries are becoming less reliant on the developed world as their economies diversify and consumer spending habits evolve.
- Positive outlook - Emerging markets long-term growth expectations are supported by solid fundamentals that include positive demographics, economic reform, improving governance and increasing industrialisation.
- Attractive yields - Emerging market bond yields remain attractive compared to other global bond markets and continue to be supported by significant inflows into the asset class.