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By Margé Karner - April 11, 2018
In 2017 emerging market debt (EMD) generated fantastic returns for investors with historically low volatility. It was a “Goldilocks” year for emerging markets. What I mean by that is everything, essentially, went right. We had accelerating global growth, low interest rates in developed markets and emerging countries rebounded after the difficult adjustment due to the commodity shock. At the same time, many of the risks – protectionism, populist election outcomes, slowdown in China - did not materialize as feared in the beginning of the year.
However, this strong performance came at a cost. It was a strong tide that raised all boats and returns weren’t differentiated between countries and credits, which raises concern about potential complacency, mispriced risks and stretched valuations.
I continue to believe emerging market debt will be an attractive option for the remainder of 2018 within investors’ fixed income allocations, but I also expect volatility and differentiation within EMD to increase requiring investors to be more discerning. I also believe active management will become important again. Today I speak to what my team will be keeping an eye on moving forward.
A-shares are shares of mainland China-based companies that are traded the Shanghai Stock Exchange and the Shenzhen Stock Exchange in local currency. The addition of these shares to MSCI's widely followed indexes is expected to spur billions of dollars in foreign investment in the Chinese market.
June 07, 2018
The recent negative equity market response—despite limited economic exposures—reflects how markets are trying to price in the risk of escalated US protectionism, rather than any specific tariff. We believe the steel and aluminum tariffs will have a limited impact on emerging markets.
March 09, 2018
Portfolio manager Patricia Ribeiro takes an active approach when evaluating the 24 diverse countries of the emerging markets universe.
July 06, 2018
Sr. Portfolio Manager Margé Karner sees attractive options for active managers headed into the second half of 2018, despite volatility.
June 28, 2018
Will 2018 be another positive year for Emerging Market Debt? VP & Sr. Emerging Market Debt Portfolio Manager Marge Karner believes the landscape looks constructive, but there are potential concerns about complacency and valuations becoming stretched.
April 11, 2018
International investing involves special risks, such as political instability and currency fluctuations.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.