The headwinds and tailwinds for EMD in 2013

EMD

Brett Diment, head of emerging markets and sovereign bonds at Aberdeen Asset Management, takes a closer look at what could be a fundamental shift in investor perceptions of the asset class.

The current global climate has left developed market bonds delivering negative real yields, forcing investors to leave risk free assets and look much farther afield for income sources. In many cases, this has meant investing in high yielding bonds, often referred to as ‘junk’ bonds, with suspect average credit ratings. An alternative to this dilemma has been in the form of emerging market debt, which in 2012 was one of the top performing asset classes in both developed and emerging markets, with total returns ranging between 15%-17%. In our view, this comes as little surprise. Emergin...