Investors missing out on emerging markets debt Go compare with our comparison table

Investors missing out on emerging markets debt

25 May 2010 / by Lois Avery

Investors are missing out on lucrative returns from emerging market debts because of a lack of understanding, according to The Share centre.

A survey of 449 private investors showed that only 5 per cent currently invest in emerging markets debt, despite already having exposure to emerging markets via funds or equities.

The figures show that 78 per cent don’t invest or don’t plan to invest in emerging markets debt and 24 per cent admitted they do not know enough about the sector to invest

But The Share Centre says that despite being a risky area, the benefits of investing in emerging markets debt can be lucrative and can help investors diversify their portfolio.

Sheridan Admans, investment adviser at The Share Centre, said: “Traditionally, investors may have gained exposure to emerging markets by investing in equity-backed funds, with many focusing on the key regions of Brazil, Russia, India and China.”
 
“In terms of risk, in a collective investment scheme investing in emerging markets debt is at the higher end of risk in a lower risk asset class as the debt is issued by institutions in their own currency. This means the investor is exposed to currency risk as well as other risks associated with emerging markets.

 “Investing in emerging markets debt is not for everyone as it may not meet the investor’s long-term objectives, but it does have benefits.”

The Share centre recommends the following funds for investors considering an investment in emerging markets debt; M&G Emerging Markets Bond fund and the Investec Emerging Market Debt fund.

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Invesco Perpetual High Income Fundyes
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M&G Corporate Bond Fundyes
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