Investing in Asia: bonds that can weather the storm
While US Treasuries recently sold off amid tariff upheaval, Asian bonds stood firm. Here’s why we think this is more than just a short-term phenomenon.
Emerging Markets Bond Fund
Why invest in Emerging Markets (EM) bonds?
A large and diversified (US $3.5 trillion [1]) asset class
A large universe with low correlation to other asset classes. EM bonds provide investors with a suitable portfolio diversifier.
EM accounts for 60% of global GDP[2]
Emerging Markets growth (4.2%) is forecasted to be more than double of Developed Markets (1.4%) growth in 2024.[3]
Compelling risk reward of 8.5% EM bonds yield [4]
Yields in EM bonds ore at 10-year highs and significantly above their 20- year average. [5] Investors ore compensated accordingly and returns are attractive.
Attractive income profile of >10% yield [6] to maturity
Providing investors with a steady distribution and scope for meaningful capital gains.
22 years track record
Flexibility to invest across the asset class - EM hard and local currency sovereigns, EMFX, and hard currency corporates - has resulted in stable investment performance.
Alpha generation of 165 basis points on an annualised basis since inception in 2001[7]
We have a 54 strong EM fixed income team across the globe and have been investing in the asset class for 27 years. This gives us the scope to research and invest in smaller issuers that are a key source of alpha generation.
[1] Source: J.P. Morgan, November 2023.
[2] Source abrdn 30 November 2023
[3] Source: IMF, June 2023.
[4] Source: IMF, World Economic Outlook, October 2023.
[5] Source: JPM EMBI Global Diversified Index, 30 November 2023.
[6] Source: abrdn, 30 November 2023.
[7] Source: abrdn, 30 November 2023. Dividends are not guaranteed and may be paid out of investment income, capital gains or capital at the discretion of the Board of Directors. Any dividends paid and distributed out of th e Fund's captial will result in an immediate reduction of the Fund's Net Asset Value per share. Post performance does not predict future results
[2] Source abrdn 30 November 2023
[3] Source: IMF, June 2023.
[4] Source: IMF, World Economic Outlook, October 2023.
[5] Source: JPM EMBI Global Diversified Index, 30 November 2023.
[6] Source: abrdn, 30 November 2023.
[7] Source: abrdn, 30 November 2023. Dividends are not guaranteed and may be paid out of investment income, capital gains or capital at the discretion of the Board of Directors. Any dividends paid and distributed out of th e Fund's captial will result in an immediate reduction of the Fund's Net Asset Value per share. Post performance does not predict future results