Asset Owners Tepidly Embrace Emerging Market Debt Again

Is it scarier investing in a double-digit yielding government bond from an emerging market or a negative-yielding sovereign bond from the West?


2016 has been the year of sinking government bond yields. Satisfying income-starved asset owners such as pensions has become a major obstacle for both internal fund management and external fund managers. For the asset manager, this experience of low or negative bond yields, has spelled out fund manager redemptions in some cases. Fixed income giants such as PIMCO and Loomis Sayles have encountered mandate redemptions from mega institutional investors such as sovereign funds and pensions. Not to mention, factor-based bond and buy-and-hold bond strategies have gained favor in the world of developed market fixed income investing.

Increased Demand

A cadre of fixed interest asset managers are receiving some grace. According to SWFI Compass, an RFP and opportunity tracking service of SWFI, there has been a higher occurrence of emerging market debt RFPs and opportunities in recent months. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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