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Public Fixed Income

EM Debt: The Benefits of a Blended Approach

February 2024 – 7 min read

The EM debt universe—larger, more diverse, and of higher-quality than generally perceived—offers compelling opportunities today. But given the uncertainties ahead, there are potential benefits to taking a blended approach.

Emerging markets (EM) debt is often referred to as one single homogenous asset class, but in reality, it is a large investment landscape offering a diverse range of opportunities. EM and developing economies (ex-China and Russia) represent a significant 23% of the world’s GDP, or around $24 trillion1, with EM issuers spanning over 90 countries and 1,000 corporates.2 Within this broad universe, there are four distinct opportunity sets: sovereign hard currency, corporate credit, local interest rates, and local currencies.

While EM debt often receives negative headline attention, it would be a mistake to paint the asset class with one broad brush. In fact, for those willing and able to dig deeper, there is significant value to be uncovered across the investment landscape. In this piece, we debunk some of the common misconceptions of this expansive asset class and discuss why a blended approach to investing in EM debt may be beneficial now, more than ever.

1. Source: IMF WEO. As of October 2023.
2. Source: Barings.

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Dr. Ricardo Adrogué

Head of Global Sovereign Debt & Currencies

Dan Gordon

Client Portfolio Manager, EM Debt

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments.

Investment involves risks. Past performance is not a guide to future performance. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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