Cet article vous est offert par RBC BlueBay Asset Management.

EMD solutions in client portfolios: Navigating emerging markets in 2024

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Amid concerns of short-term volatility following a period of robust rally, investors should consider long-term opportunities within the emerging market (EM) landscape. From hard currency sovereigns to high-yield corporate assets, to capitalise on the long-term yields offered by EMs.

The future landscape for EM debt presents both challenges and opportunities for investment intermediaries. Many investors, wary of a resurgence in volatility driven in part by geopolitical events, remain cautious about their allocations within EM asset classes. Thus, the question looms large: what lies ahead, and how should investors position themselves?

For investors looking to avoid foreign exchange volatility and enhance the stability of their portfolios, EM hard currency sovereign debt is a worthwhile consideration. This asset class allows investors to sidestep the volatility of local currencies, while continuing to capitalise on the enticing carry it offers.

Additionally, we believe that EM sovereigns have passed the peak of defaults. If this proves correct, we expect significant spread compression, particularly within the distressed segment. For investors with the flexibility to pursue total return and un benchmarked strategies, we strongly advocate for the benefits of taking an unconstrained approach. This approach tactically allocates across various EM sub asset classes, strategically seeking out pockets of attractive value without the constraints of a benchmark. This flexible approach also permits managers to construct portfolios that can capture the upside of the potential returns while also protecting on the downside during market downturns.

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