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With almost 25 years' experience in emerging market debt (EMD) investing, we manage over $8 million of assets (as of 30 June 2024) across a range of strategies that span the EMD universe: from pooled, hard-currency sovereign, hard-currency corporate and local-currency sovereign strategies to bespoke, blended and segment-specific long-only and total return solutions.
Why invest?
The conventional view of emerging markets (EM) is that they are more economically vulnerable than their developed-market counterparts. While broadly that may hold true, in our view, the increasing strength and impressive growth prospects of many EM nations, coupled with the diversification benefits they offer, mean EMD investing warrants some consideration. Whilst there is divergence across the universe, and risks that are arguably more dynamic in nature than those in developed markets, an experienced, active and disciplined approach is an important differentiator.
Diversification
EMD provides access to regions and countries across sovereign and corporate issuers in hard and local currencies. Each segment has unique risk and return drivers, helping to provide diversified returns for investors.
Structural advantages
EMD investing taps into higher economic growth rates, lower debt and other factors such as positive demographics and rapidly expanding consumerism.
Alpha opportunities
Inefficiencies within EMD create opportunities for active managers across countries, issuers, yield curves and currencies.
Disciplined approach
Our approach offers potential to achieve a smoother path of strong risk-adjusted returns and can be attractive for investors seeking to build a strategic allocation to an asset class.
Strategies referred to may not be available in all jurisdictions.
This strategy aims to deliver positive and consistent excess returns throughout market cycles by investing mainly in bonds issued by governments and corporations in emerging-market countries. It is benchmarked against the JP Morgan EMBI Global Index.
Alpha generation uncorrelated to high-yield versus investment-grade spread differentials.
Enhanced capital preservation results in a smoother path of returns than peers and the benchmark.
A process that can generate positive excess returns throughout market cycles.
This strategy aims to deliver positive and consistent excess returns throughout market cycles by investing mainly in the currencies of emerging-market countries and bonds issued by companies and governments in these countries. It is benchmarked against the JP Morgan GBI-EM Global Diversified Index.
Efficient management of currency volatility and opportunities.
Allowing for a blend of qualitative and quantitative proprietary indicators.
This strategy aims to deliver positive and consistent excess returns throughout market cycles by investing mainly in bonds issued by corporations in emerging-market countries. It is benchmarked against the JP Morgan CEMBI Broad Diversified Index.
Alpha generation uncorrelated to high-yield versus investment-grade spread differentials.
Enhanced capital preservation results in a smoother path of returns than peers and the benchmark.
A process that can generate positive excess returns throughout market cycles.
We believe opportunities exist across the entire investable universe – not just within the higher-yielding segments of the market. We harness our expertise to better understand the idiosyncratic risks across sectors and prioritise a balanced approach to portfolio construction, targeting diversified sources of return with a constant focus on risk and reward.
No biases
In our view, there are long standing and significant structural biases within the EMD manager universe, leaving investors overly exposed to the riskiest issuers. Our approach seeks to utilise the full breadth of opportunities, without any predetermined risk biases.
Deep understanding of EM risk
Emerging markets exhibit high levels of idiosyncratic risk and are characterised by periods of high volatility that many traditional risk metrics fail to capture. A deep understanding of emerging market-specific risks, combined with a blend of traditional and non-traditional risk metrics, is crucial to delivering superior client outcomes.
Focus on portfolio construction
Our proprietary risk allocation process uses custom portfolio sectors to provide a clear separation between market and asset-specific risk and exposure, enabling portfolios to perform throughout the market cycle.
In this article, we explore why measuring and continually monitoring geopolitical risks is essential for investors in EM debt.
In this article, we explore what’s behind emerging markets’ impressive performance in the face of global economic volatility, and investigate how EM debt investors can take advantage.
Seeking attractive, sustainable returns from some of the world's most dynamic economies.
Investment thinking that brings together the collective insight of Aviva Investors’ teams from across the globe on the key themes influencing markets.
18 Nov 2024
Investors should consider EMD hard currency for a long-term strategic allocation within fixed income portfolios to boost portfolio returns, rather than just a short-term tactical play.
6 Nov 2024
Aviva Investors fund managers Edward Hutchings, Liam Spillane and Max Burns offer their initial thoughts on what the US election means for financial markets.
4 Nov 2024
This month, our fixed-income investment teams discuss US elections, IMF meetings, US versus European high yield, managing declining rates for cash, and what the future might hold in store for gilts.
30 Oct 2024
In our latest private markets deep dive, our research team crunches the data to see how evolving macro conditions are reflected in private debt returns.
11 Oct 2024
In this article, we explore why measuring and continually monitoring geopolitical risks is essential for investors in EM debt.
10 Oct 2024
In our October edition of Bond Voyage, our fixed-income teams reflect on US elections, US rates, France’s slide towards the periphery of EU issuers, and ESG considerations in Asia.
13 Sep 2024
In this article, we explore what’s behind emerging markets’ impressive performance in the face of global economic volatility, and investigate how EM debt investors can take advantage.
30 Jul 2024
Emerging markets have remained robust amid the economic and political uncertainties of 2024, but active management will be important if debt investors are to identify standout performers over the coming months.
10 Jun 2024
This month, we discuss fiscal discipline in emerging markets, investment-grade credit portfolio construction, potential opportunities for sovereign investors in Canada and the merits of a developed-market focus in global high yield.
21 May 2024
Emerging-market debt analyst Carmen Altenkirch reports back from the recent International Monetary Fund (IMF)/World Bank meetings in Washington.
13 May 2024
This month, we discuss Spring Meetings and the path for rates.
25 Apr 2024
With Indian debt set to be included in major international benchmarks this year, emerging-market sovereign debt analyst Nafez Zouk travelled to the country to assess its prospects.
9 Apr 2024
In the April edition of our monthly series, we explore the latest developments in fixed-income markets.
11 Mar 2024
In the latest instalment of our monthly series, our investment-grade, high-yield, emerging-market and global sovereign bond teams explore the key talking points in fixed income.
7 Feb 2024
In the latest instalment of our monthly series, our investment-grade, high-yield, emerging-market and global sovereign bond teams look ahead to the key themes that are likely to shape fixed-income markets in 2024.
31 Jan 2024
After a challenging period for fixed-income markets, conditions look to be right for a better year in bonds.
Consistency in emerging-market debt may be elusive for many managers, but it doesn’t have to be that way, as Barney Goodchild and Aaron Grehan explain.
No one can predict the future. But our quarterly House View sets out the collective wisdom of our investment teams on the current state of global markets – and where they might be heading.
For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.
Investment & currency risk
The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.
Emerging markets risk
Investments can be made in emerging markets. These markets may be volatile and carry higher risk than developed markets.
Credit & interest rate risk
Bond values are affected by changes in interest rates and the bond issuer's creditworthiness. Bonds that offer the potential for a higher income typically have a greater risk of default.
Derivatives risk
Investments can be made in derivatives, which can be complex and highly volatile. Derivatives may not perform as expected, meaning significant losses may be incurred.
Illiquid securities risk
Some investments could be hard to value or to sell at a desired time, or at a price considered to be fair (especially in large quantities). As a result their prices can be volatile.
Sustainability risk
The level of sustainability risk may fluctuate depending on which investment opportunities the Investment Manager identifies. This means that the strategy can be exposed to Sustainability Risk which may impact the value of investments over the long term.
A dedicated EMD team with over 20 years' experience in designing and managing the full spectrum of EMD products.
Head of Emerging Market Debt and Portfolio Manager, EM Local Currency
Head of Hard Currency Emerging Market Debt
Senior Portfolio Manager
Senior Portfolio Manager
Senior Portfolio Manager
Fixed income is an indispensable building block for meeting a variety of investment goals, including income, inflation protection, liability management and capital appreciation.
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