The head of interest rates and fixed income (EMEA) at Aberdeen Asset Management has said emerging market debt is the most attractive asset class in the bond space.

‘For our multi-asset portfolios, equity asset allocation continues to favour Asian and emerging market companies, given these regions’ strong foundations. In fixed income markets, we still see potential in credit and emerging market debt, where current prices remain attractive,’ John Cunliffe said,

He thinks the default risk in these high yield sovereigns is overstated. He also believes that emerging market fundamentals remain appealing, as the accomodative global monetary policy, low inflation risk and rising growth expectations will remain supportive to these economies.  

Fund selectors at the Citywire Forum in Berlin last week shared his outlook. Voting revealed that 43% of attending fund selectors thought EM debt was the most appealing area of bonds (see article here).

Lombard Odier’s head of global fixed income and currencies, Stephan Monier, also put his backing behind the sector, ‘An added bonus is the higher yield on emerging market debt compared to other government bonds, reflecting the perceived higher risk of debt from emerging market issuers. While US treasuries yield 3% on average, Brazil yields 11.8% in local currency, Mexico 7.7%, and Turkey 9%.’