Look to Emerging Market Bonds for Income

Asia fixed income offers low returns at a very low risk level, while Africa fixed income has the potential for very high returns, but at the cost of very high risk, says Investec's Peter Eerdmans

Holly Cook 20 May, 2015 | 6:30AM
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In the current low-growth environment, emerging market yields really stand out, trading as they are at multiple-year highs. This was the bottom line of a recent presentation given by Peter Eerdmans, co-head of emerging market fixed income at Investec, at the Morningstar Investment Conference in London. “These are essentially investment grade asset classes with real yields that would be at an all-time high if it wasn’t for the credit crisis, versus negative yields for developed market debt,” Eerdmans told the audience.

Homing in on emerging market corporate bonds, the Investec manager, who runs the Investec Emerging Markets Corporate Debt fund and Bronze-rated Emerging Markets Local Currency Debt fund, said despite strong performance over the past year, such investments still offer a bit of an emerging market premium. EM corporations offer better yields on their bonds while employing less leverage than their developed market cousins, making them an “interesting proposition.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Neuberger Berman EM DbtHrdCcy EUR A C12.56 EUR0.91Rating
Ninety One GSF EM Corp Dbt A Acc USD31.73 USD-0.19Rating
Templeton Emerging Mkts Bd A(Qdis)USD9.02 USD0.46Rating

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites