Biggest and Best Emerging Market Bond Funds

Due to the sensitivity of emerging market debt to US Treasury yields, an increasing number of asset management firms have been focusing on short duration bond strategies

Morningstar Manager Analysts 14 January, 2016 | 12:39PM

In light of the interest rate hike in the US and due to the sensitivity of hard currency emerging market debt to US Treasury yields, an increasing number of asset management firms have been focusing on short duration bond strategies. These strategies seek to maintain an attractive level of yield, but limit volatility and sensitivity to movements in US treasury yields. Historically, this approach has been mostly applied to US High Yield corporate credit; however, a new trend seen over the past couple of years is the launch of short duration strategies that focus on emerging market debt.

These funds invest predominantly in the hard currency space – sovereign and corporates – and focus on shorter maturity issues, with the objective of maintaining an attractive level of income, capturing improving emerging market fundamentals through spread compression, maintaining volatility and sensitivity to US treasury yields low. 

The existing line-up of investment strategies and approaches provides investors with plenty of building blocks for gaining exposure to a still interesting and evolving asset class. In the following section, we highlight some of the funds that invest using the strategies.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AXAWF Em Mkts Sh Dur Bds A Cap EUR H112.61 EUR0.36
HSBC GIF GEM Debt Total Return L1C17.14 USD0.00
MFS Meridian Emerging Mkts Dbt A1 USD43.02 USD0.11
Pictet-Global Emerging Debt P USD427.34 USD0.45
Templeton Emerging Mkts Bd A(Qdis)USD9.74 USD0.01

About Author

Morningstar Manager Analysts

Morningstar Manager Analysts  research and rate hundreds of OEICs, unit trusts and investment trusts available for sale in the UK.

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