Kames warns on 'rising threats' to 'overbought' EMD

As US interest rate hike looms

Investors must tread carefully when investing in emerging market debt as the likelihood of a rate hike by the US Federal Reserve increases, Kames Capital has warned.

Emerging market debt has seen strong demand from investors in recent months, experiencing 11 consecutive weeks of inflows as developed market yields have reached record lows, according to Kames Capital. The sub-sector has also produced double-digit returns, with the JP Morgan Emerging Market Bond Index Global Diversified rising 14.2% year to date. However, Scott Fleming (pictured), who runs the Kames Emerging Market Bond fund, believes various factors should prompt investors to rein in their optimism. These concerns include the likelihood of a further interest rate hike by the US F...