Why invest in EM local currency debt?

Capital Group
By January 14, 2022 10:05

Why invest in EM local currency debt?

Disappointing US dollar bond returns in EM local currency debt has led to a decline in flows into the asset class over the past decade. In this paper, we discuss the key reasons to invest in EM local currency debt, some of the factors behind the recent weakness in the asset class returns and prospects for the asset class going forward.

Key takeaways

  • Emerging market (EM) local currency returns have been disappointing over the past decade, largely reflecting weak EM currencies.
  • We see potential for a strengthening of EM currencies, but the timing is uncertain and a high correlation between EM foreign exchange (FX) and US rates has the potential to further dampen returns.
  • There are still attractive opportunities across different parts of the asset class, but selectivity is key.

Asset Manager

Capital Group is one of the largest and most experienced investment management companies in the world

Capital Group is in 1931 opgericht in de Verenigde Staten en een van de grootste onafhankelijke vermogensbeheerders ter wereld met een actief beheerd vermogen van meer dan $2,1 biljoen. We doen alleen vermogensbeheer. Al 90 jaar is het ons primaire doel om een consistent en superieur resultaat te realiseren voor langetermijnbeleggers.

Website:capitalgroup.com

Feike Goudsmit
Managing Director, Institutional
Tel: +31 (0) 20 797 7575
E-mail: feike.goudsmit@capitalgroup.com

LinkedIn: capital-group-europe

Capital Group
By January 14, 2022 10:05

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