Emerging economies have had national elections, political turbulence, and foreign exchance volatility to contend with. Despite this, emerging market debt has been a stand-out performer in 2014. Co-heads of credit at Hermes, Fraser Lundie and Mitch Reznick, explain why the sector will continue to shine.
Within global high yield, emerging market (EM) debt has been the trade of the year. After outperforming developed market (DM) high yield by about 260 basis points year-to-date, one might think it is time to take profits. This is not true, for a number of reasons. The outperformance in EM high yield is remarkable when you consider the macroeconomic backdrop of the last few months. Most emerging economies are experiencing a slowdown in growth and struggling with heightened volatility in foreign exchange rates and capital flows. There have also been several elections and geopolitical eve...
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