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Do Advisors Want to Increase Emerging Market Bond Allocations?
16 April 2024
Read Time 1 MIN
In a recent Investment News article, Eric Fine explains why emerging market bond allocations are expected to go up—and why he believes that’s exactly where they should be headed.
Emerging market (EM) bonds represent one of the most compelling – and most misunderstood – opportunities for global investors. Despite strong underlying fundamentals and historical performance, EM bonds are frequently under-allocated as a fixed income asset.
Eric Fine recently sat down with Investment News to explain why advisors could take a closer look at this overlooked asset class:
- While there is risk in EM bonds, there is not as much as many advisors and investors believe. This is especially true in the current global economic environment.
- Emerging market fundamentals look compelling relative to developed markets across a range of metrics, including fiscal deficits and current account deficits.
- EM bonds also boast higher yields that significantly outpace developed markets.
- Despite these advantages, a very low percentage of advisors allocate assets to EM debt funds.
Risks associated:
- Emerging Market Risk: Investments in emerging markets may involve specific political, economic and financial risks that have a significant impact on valuations and liquidity of those investments.
- Currency Risk: Some of the Fund's assets can be invested in currencies, other than the Fund’s currency. The performance of the Sub-Fund can be subject to elevated volatility on the downside as well as on the upside due to currency fluctuations.
- Credit Risk: The Fund will invest in bonds that are subject to varying degrees of risk that the issuers of the securities will have their credit ratings downgraded or will default, potentially reducing the value of the securities.
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Important Disclosure
This is a marketing communication. Please refer to the prospectus of the UCITS and to the KID before making any final investment decisions.
This information originates from VanEck (Europe) GmbH, which has been appointed as distributor of VanEck products in Europe by the Management Company VanEck Asset Management B.V., incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM). VanEck (Europe) GmbH with registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, is a financial services provider regulated by the Federal Financial Supervisory Authority in Germany (BaFin).
The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice VanEck (Europe) GmbH, VanEck Switzerland AG, VanEck Securities UK Limited and their associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results. Information provided by third party sources is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Brokerage or transaction fees may apply.
All performance information is based on historical data and does not predict future returns. Investing is subject to risk, including the possible loss of principal.
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© VanEck (Europe) GmbH / VanEck Asset Management B.V.
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