What factors could derail the emerging market debt rally?

Record inflows in run-up to Brexit

The desperate search for yield and a desire to invest outside of the UK and Europe post-Brexit has boosted flows into emerging market debt (EMD) this year.

In the run-up to the EU referendum in June, flows into EMD funds reached a weekly record of $3.42bn globally for the week ending 6 June, according to data provider EPFR Global. Meanwhile, following more than six months of consecutive outflows, the IA Global Emerging Market Bond sector has attracted over £292m of inflows since February.   Fund beneficiaries in the UK have included the Aviva Investors Emerging Markets Local Currency Bond fund, which has seen assets increase by a staggering 338% since the start of the year to £2.2bn, M&G Emerging Market Bond, up 97% to £247m, and Fidelit...