In focus
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$16trn
do tend to be higher
than on developed
eloped
v
e
d
f
o
– value
market bonds,
offering
s
d
n
o
b
t
marke
which compensates
yields
e
v
i
t
a
g
e
n
investors for the risks
they are taking on.
“Additionally, the fact
emerging economies are often
at a slightly different part of the cycle
to developed markets can lead to
diversification in portfolios.”
Alejandro Arevalo, head of emerging
market debt at Jupiter, notes that
while emerging market debt is often
thought of as an asset class for “the
good times” when global growth is
strong, it has been known to deliver
strong performance during periods
of stress, such as the global financial
crisis in 2008.
“In 2008, emerging market hard
currency debt recovered its losses
within just nine months, compared
with 19 months for the S&P 500,” he
“Despite having a 10
per cent annualised
return, similar to the S&P
over the last 25 years,
emerging market hard
currency debt only had
half the volatility”
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“In 2008, emerging
market hard currency debt
recovered its losses in just
nine months, compared
with 19 for the S&P 500”
says. “Also, despite having a 10 per cent
annualised return, similar to the S&P
over the last 25 years, emerging market
hard currency debt only had half the
volatility.”
Contrary to popular market
commentary, Arevalo adds this strong
return and low volatility continued
through both cutting and hiking cycles
from the Federal Reserve, as well as
periods of currency depreciation in
emerging market countries.
A mixed bag
So what led the asset class to perform
well? Arevalo points out the emerging
market debt universe is a diverse one,
comprising 83 countries covering 85
per cent of the global population, with
credit ratings from AAA to CCC and
maturities up to 100 years.
“The $3trn emerging market debt
universe allows diversification and
enough opportunities at any point
in the cycle,” he adds. “Each of the
emerging market countries comes with
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