The Fed's Wind Down Favors EM Bond Duration?
Emerging markets bonds continue to outperform developed markets bonds, and could continue to benefit from positive secular tailwinds in the long run.
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Emerging markets bonds continue to outperform developed markets bonds, and could continue to benefit from positive secular tailwinds in the long run.
Are EM currencies poised to break out? US default risk and the concern over the USD’s reserve currency status conspire against the US dollar and are positive tailwinds for EM debt.
Compared to the U.S. and other developed markets bonds, EM bonds not only provide significantly higher nominal and real yields on average but also shorter durations.
The Fund continues to outperform its benchmark year-to-date, in part due to its exposure to high-beta EMFX.
We believe the market has not yet priced in weaker growth projections. As such, we continue to increase low-beta spread duration and reduce exposure to EMFX.