60 seconds on global credits: emerging market debt
For us emerging markets specifically have been in the wrong end of investor portfolios for a few years now, since pretty much 2015. And as a result, investors have been underinvested in emerging markets. Emerging markets went through a cathartic moment of volatility, of defaults, and now they have readjusted and are building up their balance sheets.
For us as a result, emerging markets offer a lot more yield than the risks that necessarily existing within the system. Having said that though, we still think there are some weaknesses within the emerging market universe, so it is critical to invest in areas where there is healing occurring rather than just chasing yield.
And so to that end, we are holding a larger allocation to emerging market debt today, than we were historically, given this healing process that’s happening within the emerging market universe.
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