Are frontier market bonds worth the risk?

Raoul Luttik, lead portfolio manager, EMD local currency strategy at Neuberger Berman, explains why frontier market bonds may be a better bet than emerging markets this year

Investor sentiment on emerging markets has been volatile during recent years due to weak growth performance by the major regions, the oil and commodity price shock and the impending end of the era of ‘cheap money' that has prevailed since the global financial crisis. We find this sentiment unnecessarily negative and are seeing opportunities within the asset class. One area displaying long-term investment opportunities is local currency frontier market bonds, which can offer good returns despite looming rate hikes by the Federal Reserve. Over the past five years, we have seen real carry o...