Emerging Markets Debt May Lift Performance Potential for Australian Investors

By Joyce Huang, CFA - October 2019

Key Takeaways

  • Emerging markets debt (EMD) is a large, diverse and complex asset class. It’s comprised of divergent economies, return drivers and credit profiles that behave differently in various markets.
  • Overall, EMD has offered attractive yield and risk-adjusted performance potential, better credit-quality profiles than high-yield developed market credit, and low correlation to other asset classes.
  • We believe these distinctive characteristics make EMD an important asset allocation component, particularly in today’s environment of unusually low developed markets interest rates.
  • For Australian investors, the benefits may be even more compelling, largely due to the negative correlation between EMD and Australian assets.
  • We believe an unconstrained strategy that dynamically manages local and external allocations, currency exposure and hedging can deliver attractive risk-adjusted performance to Australian investors.
Joyce Huang, CFA
Joyce Huang, CFA
Sr. Client Portfolio Manager

Emerging Markets Debt May Lift Performance Potential for Australian Investors

Market Perspective | October 2019

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    Emerging Markets Debt May Lift Performance Potential for Australian Investors

    Sr. Client Portfolio Manager Joyce Huang explains why an unconstrained, "benchmark-agnostic" approach with a rigorous risk-management effort may offer a better solution than tracking a benchmark index.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.