From Adviser Guide:
Emerging market debt funds 1hr
Q: What is driving the performance of emerging market debt?
Endogenous factors such as higher productivity growth and favourable demographics have enhanced the catch up of emerging markets.
Productivity growth is structurally higher in emerging compared to developed economies, according to Rob Drijkoningen, head of global emerging markets for ING Investment Management.
The fundamental reasons for that are manifold but Mr Drijkoningen said the most important one is the under utilisation of resources combined with the development of technological and institutional frameworks.
He said this higher productivity potential has attracted capital from the developed world in the form of foreign direct investment.
Mr Drijkoningen said: “This has clearly helped to lift the share of emerging markets in the global economy. This share has increased from 20 per cent a decade ago to 34 per cent in 2010 and is expected to exceed 39 per cent by 2015, based on nominal GDP.”
Brett Diment, head of emerging markets on the fixed income team at Aberdeen Asset Management, said in emerging markets competitive and robust markets offer investors compelling investment opportunities.
Furthermore, he said there has been a shift in the balance of power in emerging markets. Traditional export-led countries are becoming less dependent on slowing developed markets.
Mr Diment said: “Emerging countries have witnessed growing and highly aspirational middle classes and domestic demand is emerging as the driver of the economies.”
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More in this guide
- Q: What is emerging market debt?
- Q: What are the different types of emerging market debt?
- Q: What are the pros and cons of emerging market debt?
- Q: Which investors should consider emerging market debt?
- Q: What is the duration of emerging market debt funds?
- Q: What is the credit quality of emerging market debt?