Fixed Income
The emerging markets (EM) debt universe is diverse, made up of sovereign and corporate debts issued across more than 60 countries in hard and local currencies. It’s often treated as a homogeneous group, but we take a different view and believe that understanding the differences across this diverse opportunity set is key to investment success.
Capturing the full potential of an evolving market
A flexible approach means we can invest in corporates, inflation-linked bonds and non-index* countries to capture the most compelling opportunities.
Research-driven philosophy
On-the-ground, fundamental research with local insights are combined with global macro analysis when the investment team constructs the portfolio.
Experience from a pioneer
Our EM debt investment professionals have been working together for over 20 years. Having first invested in EM in 1990, we have developed a deep understanding of market complexities.
“We often invest in new markets early in their development, and we invest when we see an attractive risk-return, not simply because a country is in the index. This means we typically look quite different to the index*.”
Kirstie Spence
Emerging market debt portfolio manager
Gaining exposure to emerging markets debt
Depending on the investment objective, a strategy that only invests in local currency issues or one that invests across both local and hard currency debts may be more suitable.
Local currency focused
As emerging markets mature, it opens up the potential for these countries to issue local currency debt. Structural currency appreciation and high real yields offer an attractive risk-reward trade-off.
Blended strategy
Blending hard and local currency opportunities offers diversification across the broader market, and a blended portfolio could adapt to changing market environments.
Investment insights
Our research-led investment thinking on emerging markets
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Emerging Markets
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World Markets Review
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World Markets Review
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The Capital Group difference
Our long-term investment approach and multi-layer risk management framework is designed to keep risk at a reasonable level for our investors in our bid to generate excess returns.
Long-term allocation built on convictions
Regardless of the specific investment strategy, an active research-driven approach is key to maximise the opportunity set and diversify according to credit rating, region, market size and economic drivers.
Multi-layer approach to managing risks
Integrated within the investment process is a multi-layer approach that considers investment, operations and strategy-level risks. We strive to ensure our bond portfolios deliver predictable outcomes, and one element that sets us apart is our Risk and Quantitative Solutions Group (RQS). Tasked with contributing to superior long-term fixed income results, the RQS provides positioning, scenario analysis and risk analytics.
*Compared to JPM GBI-EM Global Diversified.
The information in relation to the index is provided for context and illustration only. The fund is an actively managed UCITS. It is not managed in reference to a benchmark.
Past results are not a guide to future results. Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. The information provided is not intended to be comprehensive or to provide advice.
Risk factors you should consider before investing:
- This material is not intended to provide investment advice or be considered a personal recommendation.
- The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
- Past results are not a guarantee of future results.
- If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
- Some portfolios may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.
- Depending on the strategy, risks may be associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.