At a glance

Yield opportunities

Historically, emerging market local bonds have provided attractive relative yields and access to strong developing market sovereign balance sheets.

Balancing risk and return

We harness manager skill, attempting to outperform the market while simultaneously minimising the downside risk associated with this asset class.


Broad fixed income markets have declined in 2022. In particular, emerging market (EM) debt has suffered one of its largest selloffs since the 1990s, even though bottom-up fundamentals are relatively sound. At this point, we believe the value created in EM has been significant, potentially generating an attractive entry point for investors with a long-term perspective.

Emerging market debt is fixed income debt that is issued by countries with developing economies as well as by corporations within those nations. It includes local and hard currency.

Local currency bonds are debt securities issued by sovereigns or corporates in their local currency. The return drivers come from local yields, capital appreciation (changes in yield curve or credit standing) and FX. Since countries can be at different stages in the economic cycle, interest rates and returns can be uncorrelated to those in developed markets. Given continued growth, local currency bonds tend to be more liquid than hard currency bonds and the list of markets with investible/liquid local bond markets that are accessible to foreign investors, continues to increase.

Hard currency bonds are debt securities issued by sovereigns or corporates in other currencies – usually in a developed market currency, such as the USD or euro. Many low income, weaker developing countries, “frontier markets” are incented to issue in hard currency to attract foreign investment (perceived as less risky if issued as a USD or euro asset) versus issuing in their local currency.