60 seconds with Rajeev De Mello on the yields in EM
Currently, we’re in a very unusual situation where about 13 trillion dollars worth of bonds have negative yields. For institutional investors and retail investors, all investors in bond, this is an incredibly difficult problem to solve – not only are they getting nothing from their bonds, but they actually have to pay some kind of return to own any bonds. So what kind of solutions are there for these investors? We think that emerging market bonds offer some type of solution to this problem - they generally have significantly higher yields than developed country bonds. And what we’re seeing is that their yield levels are coming down as well, giving the bonds a capital appreciation as well. For investors who are thinking about the long term, it is really a question of getting some kind of yield locked in – they’ll need it for their spending requirements – and finding a basket or combination of bonds which gives them a high yield over a sustained period is absolutely critical. I would encourage them to look at emerging market yields, which offers significant pick up to what we’re seeing in the developed world.
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