Emerging markets: A focus on debt

Asset class can protect against risk

clock • 4 min read
Kristin J Ceva of Payden & Rygel
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Kristin J Ceva of Payden & Rygel

Investors considering emerging market exposure tend to concentrate on equities, but the emerging market debt segment is arguably more diverse, lower risk, and many issues are now investment grade.

Investors perceive emerging market debt as high risk, but in fact, this asset class is broad enough to offer investments all along the risk spectrum.  There are 80 countries in the universe of emerging markets enabling portfolios to be built with exposure to a wide range of countries in, for example, Africa, Latin America, Asia and, indeed Europe. In fact, emerging market debt is not as risky as many believe. The risk/return ratio is in fact significantly better than in emerging market equities. Over the past 20 years, investors have achieved the same annualized total return as ...

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