What is Emerging Markets Debt (EMD)?
- Generally, emerging markets are countries that are developing open-market economies.
- Emerging market countries are usually in the process of implementing reforms aimed at improving underlying credit fundamentals and market transparency. The debt issued by governments, government sponsored enterprises, and corporate issuers in these developing countries is considered emerging markets debt. Such debt may be denominated in hard or local currency.
- The Funds define "emerging market" countries to include countries identified by the World Bank Group as being "low income economies" or which are included in a
J.P. Morgan emerging markets bond index.
- We believe emerging debt markets are transitioning to a strategic allocation within pension funds globally. Pension funds, which historically have viewed this asset class as an opportunistic investment, are now starting to make emerging markets debt a more permanent part of their strategic asset allocation.
- We believe the early stages of development of corporate debt and local currency sovereign debt in emerging markets provide a compelling investment opportunity.
- We believe a valuation opportunity exists as the market does not fully reflect the strides that emerging market countries have made in battling potential inflation.