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The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
First caught in the crosshairs of the COVID-19 crisis, then roiled by the Russia/Ukraine conflict and the onset of global monetary tightening, emerging markets (EMs) have experienced their share of challenges and volatility over the past few years. Despite the recent turmoil (or in some cases, because of it), we think now is an interesting and opportune time to consider investing in emerging local debt (ELD) markets. As we survey today’s ELD landscape, we see potentially positive trends across fundamentals, valuations, and technicals that we believe are likely to be supportive of these markets going forward.
ELD markets have two primary sources of investment returns: interest rates and currencies. Let’s look at both and how they factor into our current outlook for these markets.
At the asset class level, our views on the fundamental, valuation, and technical outlooks for ELD markets are generally positive. The market headwinds posed by today’s geopolitical and macroeconomic risks, while potentially formidable, do not by themselves detract from our conviction that some investors may benefit from having some portfolio exposure to both EM interest rates and currencies.
1Sources: JPMorgan, EM central banks, Wellington Management. | 2Source: JPMorgan.
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Natasha Brook-Walters, Co-Head of Investment Strategy, discusses downside mitigation given the shifting equity/bond correlation, the impact of cyclical and macro volatility, and opportunities to position for long-term change.
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Amid ongoing dislocation in the high-yield market, Fixed Income Portfolio Manager Konstantin Leidman sees opportunities for investors to take advantage of potentially attractive valuations.
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In a challenging year for fixed income markets, members of our Fundamental Factor team highlight a bright spot: the momentum factor in global government bond and corporate credit markets.
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Three members of our fixed income team argue that the headwinds currently facing CLO equity should give way to improved returns in 2023 and beyond.
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Insurance Strategist Tim Antonelli shares his latest multi-asset views for insurers, including the need to balance defensive portfolio strategies with continued income and return generation.
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Hedge funds could be valuable building blocks for a fixed income substitute portfolio, but how should the portfolio be constructed? Members of our Fundamental Factor Team share their views.
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Against a still-challenging global backdrop for emerging markets, Macro Strategist Gillian Edgeworth highlights opportunities created by extreme credit spread dispersion across individual countries.