Emerging Market Bonds: Winners and Losers

Claudia Calich, manager of the M&G Emerging Markets Bond Fund, discusses where she sees current opportunities and risks in the asset class

M&G Investments 14 June, 2016 | 12:02PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Claudia Calich, manager of the M&G Emerging Markets Bond Fund, discusses where she sees current opportunities and risks in the asset class.

Emerging bond markets have delivered decent returns in the year-to-date period, despite fluctuations along the way, thanks largely to a solid rally during March and April. While gains were registered across the sovereign and corporate sub-asset classes, it was local currency-denominated government debt that has led the performance rankings in a marked reversal of relative performance compared to last year.

Looking ahead in 2016, returns are likely to consolidate at a slower pace than those seen year to date. Importantly, however, with the asset class providing yields in the range of 6-7% on average, even if the price return slows going forward, there is still the attractive prospect of the carry return.

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M&G Investments  is a leading retail and institutional fund manager.