DoubleLine Capital sees emerging markets entering a virtuous feedback loop despite Middle East conflict rattling investors. Bill Campbell, who oversees global sovereign debt at Jeffrey Gundlach's firm, identifies structural convergence between advanced and developing economies as creating significant opportunities in developing-world markets.

Campbell highlights that emerging market local fixed income offers multiple value sources as dollar-denominated assets trade at stretched valuations. The firm's strategies maintain minimal direct exposure to Middle East tensions while being positioned slightly less sensitive to interest-rate changes than benchmarks.

Commodity exporters like Chile, Peru and South Africa stand to benefit from rising global demand tied to infrastructure and defense spending in advanced economies. Campbell notes that Chilean peso, Peruvian sol and South African rand have strengthened over the past year, with the rand climbing nearly 13%. He emphasizes attractive nominal carry and real yields in countries like Brazil and South Africa, where policymakers have anchored inflation expectations.

Global investors have largely overlooked emerging market gains, Campbell wrote, suggesting more-astute investors can capitalize on EM-DM convergence as developing economies prove more resilient than their developed counterparts.