Investors seeking exposure to emerging markets could benefit over the long-term from investing in M&G's Emerging Markets Bond Fund, according to The Share Centre's latest fund in focus report.
Since its launch in 1999, the M&G Emerging Markets Bond Fund has invested primarily in debt instruments to maximise the long-term total return for investors.
The fund, which is managed by Jim Leaviss and has returned 38 per cent over the last three years, only holds bond issued by emerging market borrowers that are denominated in G8 currencies and will avoid loans or corporate issues, which "can be higher risk and other lower long-term returns".
Explaining the benefits of investing in emerging markets, Sheridan Admans, investment adviser at The Share Centre said: "Emerging markets have become increasingly popular with investors over recent years, given their strong fundamentals, positive reform, advantageous demographics, wealth in resources and sound banking systems.
"More recently, the global financial crisis has helped to boost the attraction of emerging markets debt. As pressure grows on the UK and US to reduce their debt level, which is almost 80 per cent and 90 per cent of GDP respectively, many emerging markets such as Brazil, Poland and Indonesia are demonstrating fiscal surpluses."
Mr Admans believes this is important as it shows "some degree of certainty" that these countries have the ability to repay the investment with interest.
However, acknowledging that exposure to emerging markets carries some risk Mr Admans urges investors to consider a number of factors including currency fluctuations, political upheaval and inflation before investing in this sector.
"Investing in emerging markets is far riskier than investing in the developed world. As such, this fund sits higher up the risk scale for lower risk investors. For those who believe emerging markets have a significant role to play within the developing global economy, funds like the M&G Emerging Markets Bond could be just the ticket," he said.
© Fair Investment Company Ltd
