3 Emerging Market Funds for Income

Low or negative yields from developed world bonds are pushing income investors to move up the risk spectrum

James Gard 11 February, 2020 | 11:13AM

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Emerging market investing has traditionally been focused on growth but investors are starting to look further afield for income these days. As developed world bond markets are, in many cases, offering negative yields and emerging economies are much better managed than in the past, it is natural that many investors may look to these areas for income options. 

Of course, there is still currency and political risk to fear – Turkey, Venezuela and Argentina have had crises in recent years – but most emerging bonds are rated as "investment grade" by credit ratings agencies. Rampant inflation seems to be less of a concern than in the past: Mexico, for example, has inflation below 3% but it’s 10-year government yield is nearly 6.8%, compared with the 1.6% yield on offer from US treasures, where inflation is running at 2.3%. 

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About Author

James Gard  is content editor for Morningstar.co.uk

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