Emerging market debt: an active approach

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Emerging market debt (EMD) has already broadened and deepened significantly in the last few decades and as the asset class has developed, it has become more appealing to a broader investor base. Issuance has increased, thereby improving liquidity. Yield curves have become more developed, allowing active investors to add value via positioning across different maturities.

As these factors have improved, the ownership mix has diversified, with a greater balance between foreign and domestic owners. This trend looks set to continue over the next decade. As this happens, it will be more important than ever to access the market proactively. 

While EMD has had a difficult start to the year, with rising inflation, monetary policy tightening by major central banks, Russia’s invasion of Ukraine and a slowdown in the Chinese economy, an active, research-based approach to investing can help identify attractive opportunities in emerging markets (EM), while mitigating risks.