Emerging bond funds have drawn 12 weeks of continuous inflows, as investors from JPMorgan, Generali and Ninety One SA load up on emerging‑market debt despite Treasury yields topping 5%. The surge defies historical patterns where tightening sent money fleeing EM assets.
Returns from EM bonds are now nearly four times those of Treasuries, driven by concerns over rich‑world debt burdens and budget deficits that have pushed US, euro‑zone and Japanese borrowing costs higher. Iain Stealey, CIO of fixed income at JPM Asset Management, calls the sector “one of the most constructive allocations” in the firm’s $4.3 trillion portfolio and says the firm will keep deploying capital there.
Peter Kent, co‑CIO at Ninety One Asset Management, says they no longer use Treasuries as a valuation metric, noting spreads were tight eight months ago. Stronger fiscal profiles and higher inflation‑adjusted yields in emerging markets help them weather global fixed‑income stress, according to Guillaume Tresca of Generali and Milana Muratova of Aberdeen.
Pockets of stress remain, with India taking steps to support its currency and borrowing costs near 10% in Mozambique, Sri Lanka and Ecuador. Eric Fine of Van Eck says the shift reflects judging EM debt on its own merit, not relative yield.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing