The Income Hunt: Opportunities Abroad

By Russ Koesterich:

Investors often have a home country bias when it comes to their fixed income portfolios, which means they are generally too reliant on domestic issues. Today, however, there are a number of reasons why investors should consider maintaining a strategic benchmark allocation to emerging market debt.

In recent posts, I’ve highlighted some of these arguments, including the increased stability and improving fundamentals of emerging market countries. But since so many investors are asking me lately about emerging market debt, I figured I’d expand on the case for this asset class in this post. Here’s a bit more on four arguments favoring exposure to emerging market fixed income.

Better fiscal positions: Emerging markets exited the financial crisis in a far better position than their developed market counterparts. The average debt burden of emerging markets is less than 40% of gross domestic product, while developed market debt has soared to more than


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