Since the end of the 2013 year, amid lacklustre EM growth momentum, negative news headlines and weakened FX regimes, the team has maintained its “out-of-consensus” view on EMD risk assets. Our viewpoint has been that EM economies, albeit strained, were not in fully-blown crisis. We have potentially seen the worst of the growth scare and despite ongoing retail mutual fund redemptions markets would stabilise due to large institutional investors remaining invested. Market consensus has swung around to our viewpoint. We now believe that investors should watch for potential recovery in the economies that were hardest hit over the last twelve months. That said, the EMD universe continues to see a significant number of headlines, from Venezuela to Ukraine, Russia and China. This continues to contribute to the cloudiness surrounding EM debt markets.
Steve Ellis is the lead portfolio manager of the investment teams that run the FF-Emerging Market Debt and FF-Emerging Market Local Currency Debt Funds.