City Financial's Harris: Emerging market debt 'overpriced'

Emerging market sovereign bonds have become overpriced following a surge in inflows as investors hunted for higher yields, City Financial's head of multi-asset Mark Harris has said.

Harris, manager of City Financial's MultiManager Growth fund, MultiManager Income fund, Diversified and Dynamic funds, said emerging market debt looked vulnerable and may go the way of developed market sovereign debt when a true rotation out of bonds takes place. "Emerging market sovereigns now appear overpriced, and many developed sovereign bond markets have already sold off heavily in the first weeks of 2013," he said. Investment grade and high-yield credit also looks "very expensive", he said. "The January sell off is a prescient warning of what is likely to come." Instead of lo...