Income Investors Snap Up Emerging Market Bonds

In the current low interest rate environment emerging market debt offers significant potential for returns, especially when compared to bonds in developed markets

Karen Kwok 1 September, 2016 | 10:37AM

Investors desperate for income have flocked to emerging market bond funds – among the few fixed income options offering a positive real return. Since the beginning of the year, investors have poured £189 million into global emerging markets bond funds, according to Morningstar Direct.

In the month after the Brexit vote, the sector saw the largest inflows since July 2014 with £56 million, as investors looked for income overseas in response to falling gilt yields.

And it is not just active funds which are seeing inflows either; global emerging market bond ETFs saw €508 million of inflows in July 2016 alone, the largest inflows in the past five years. Year to date global emerging market bond ETFs have recorded €1.4 billion total inflows.

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About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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