More than zero: Using emerging markets bonds to optimise portfolios

There are a number of reasons many investors do not yet have emerging markets (EM) bonds in their portfolio, including awareness, understanding and difficulty of access. All of this means investors are potentially missing out on the diversification and yield benefits associated with EM bond investing. We often described EM bonds as “the missing asset class”, arguing that investors should consider allocating to EM bonds as either part of an allocation to global bonds or as a standalone asset class. The purpose of this paper is to go a step further and highlight how an allocation to EM bonds can enhance a diversified portfolio.