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From Adviser Guide: Emerging market debt funds

Q: What is the duration of emerging market debt funds?

The duration of emerging sovereign bonds is about seven years, which is higher than developed market government and credit indices.

By Emma Ann Hughes | Published Jul 12, 2012 | comments

Rob Drijkoningen, head of global emerging markets for ING Investment Management, said the local bond index has an average duration of 4.36 years as yield curves are still being built and the demand is typically quite strong for short-dated bonds.

Emerging market corporate bonds have an average duration of almost six years, he added.

Emerging market debt local currency money markets has a very short duration of less than two months, Mr Drijkoningen said, because it invests in currency forwards with maturity of one to three months.

In terms of how long an investor should hold on to this type of fund for, Brett Diment, head of emerging markets on the fixed income team at Aberdeen Asset Management, said it very much depends on the investors’ investment horizon and risk characteristics.

However he said, as with other asset classes, the focus should be on the long term.

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