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Our approach to emerging market debt investing

With over 20 years' experience in emerging market debt (EMD) investing, we manage over $8.5 billion of assets (as at 31 December 2022) across a range of strategies that span the EMD universe; from pooled, hard-currency sovereign, hard-currency corporate and local-currency sovereign strategies to bespoke, blended and segment-specific long-only and total return solutions.

Our approach to EMD investing focuses on three key pillars:

No biases

In our view, there are long standing and significant structural biases within the EMD manager universe, leaving investors overly exposed to the riskiest issuers. Our approach seeks to utilise the full breadth of opportunities, without any predetermined risk biases.

Deep understanding of EM risk

Emerging markets exhibit high levels of idiosyncratic risk and are characterised by periods of high volatility that many traditional risk metrics fail to capture. A deep understanding of emerging market-specific risks, combined with a blend of traditional and non-traditional risk metrics, is crucial to delivering superior client outcomes.

Focus on portfolio construction

Our proprietary risk allocation process uses custom portfolio sectors to provide a clear separation between market and asset-specific risk and exposure, enabling portfolios to perform throughout the market cycle.

Potential benefits of emerging market debt

Potential for attractive, sustainable returns from some of the world’s most dynamic economies.

Structural advantages

Taps into higher economic growth rates, lower debt and other factors such as positive demographics and rapidly expanding consumerism.

Diversification

EMD provides access to regions and countries across sovereign and corporate issuers in hard and local currencies. Each segment has unique risk and return drivers, helping to provide stable, diversified returns for investors.

Alpha opportunities

Inefficiencies within EMD creates opportunities for active managers across countries, issuers, yield curves and currencies.

Key risks

For further information on the risks and risk profiles of our funds, please refer to the relevant fund documents.

The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.

Emerging markets risk

The funds invest in emerging markets; these markets may be volatile and carry higher risk than developed markets.

Derivatives risk

The funds may use derivatives; these can be complex and highly volatile. Derivatives may not perform as expected, which means the fund may suffer significant losses.

Credit risk

Bond values are affected by changes in interest rates and the bond issuer's creditworthiness. Bonds that offer the potential for a higher income typically have a greater risk of default.

Illiquid securities risk

Certain assets held in the funds could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.

Aviva Investors Emerging Market Debt: Range in brief

PDF 1.3 MB 9 pages

We believe emerging debt markets are less efficient than developed debt markets and investment opportunities are created by the breadth and diversity of an under-researched and under-reported universe.

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Emerging market debt strategies

Strategies referred to may not be available in all jurisdictions.

Aviva Investors Emerging Markets Bond Strategy

This strategy aims to deliver positive and consistent excess returns throughout market cycles by investing mainly in bonds issued by governments and corporations in emerging-market countries. It is benchmarked against the JP Morgan EMBI Global Index.

Uncorrelated alpha

Alpha generation uncorrelated to high-yield versus investment-grade spread differentials.

Smoother path of returns

Enhanced capital preservation results in a smoother path of returns than peers and the benchmark.

Consistent outperformance

A process that can generate positive excess returns throughout market cycles.

Aviva Investors Emerging Markets Local Currency Bond Strategy

This strategy aims to deliver positive and consistent excess returns throughout market cycles by investing mainly in the currencies of emerging-market countries and bonds issued by companies and governments in these countries. It is benchmarked against the JP Morgan GBI-EM Global Diversified Index.

Clear separation of currency and duration decisions

Efficient management of currency volatility and opportunities.

Flexible process

Allowing for a blend of qualitative and quantitative proprietary indicators.

Aviva Investors Emerging Markets Corporate Bond Strategy

This strategy aims to deliver positive and consistent excess returns throughout market cycles by investing mainly in bonds issued by corporations in emerging-market countries. It is benchmarked against the JP Morgan CEMBI Broad Diversified Index.

Uncorrelated alpha

Alpha generation uncorrelated to high-yield versus investment-grade spread differentials.

Smoother path of returns

Enhanced capital preservation results in a smoother path of returns than peers and the benchmark.

Consistent outperformance

A process that can generate positive excess returns throughout market cycles.

Emerging market debt team

  • Liam Spillane

    Head of Emerging Market Debt and Portfolio Manager, EM Local Currency

  • Aaron Grehan

    Head of Hard Currency Emerging Market Debt

  • Michael McGill

    Senior Portfolio Manager

  • Amy Kam

    Senior Portfolio Manager

  • Kurt Knowlson

    Senior Portfolio Manager

    • Emerging market debt views

    • Viewing emerging-market debt through a fresh lens

      4 Apr. 2023

      With a series of shocks hitting the emerging-market sovereign bond universe in recent years, investors need to be alert to the danger individual countries’ debt is being placed in the wrong risk bucket and mispriced, argues Carmen Altenkirch.

    • Boom! Shake the gloom? Does China’s reopening mark a new beginning?

      29 Mar. 2023

      China looks set for a rapid economic rebound in the first quarter after finally abandoning its zero-COVID policy. But will the recovery prove temporary as longer-term dynamics reassert themselves?

    • China, the Fed and fiscal buffers: What next for emerging-market debt

      13 Mar. 2023

      While uncertainty around the US rate-hiking cycle is affecting appetite for emerging-market debt, discerning investors can still find attractive opportunities in 2023, say Aaron Grehan and Carmen Altenkirch.

    • Why fixed income, why now? Navigating a new era for bond markets

      31 Jan. 2023

      Despite ongoing market volatility and geopolitical uncertainty, 2023 could bring attractive opportunities for fixed-income investors, says Barney Goodchild.

    • EMD outlook: Why 2023 could offer improved prospects as storm clouds lift

      10 Jan. 2023

      After a bruising 12 months, our emerging-market debt team anticipates an improvement in the asset class’ fortunes in 2023 as declining inflation allows central banks to ease back on monetary tightening. But with many issuers still at risk of default, investors will need to tread cautiously.

    • The IMF/World Bank meetings in review: The key questions for emerging-market debt investors

      2 Nov. 2022

      Pessimism was in the air at the recent IMF/World Bank meetings, with emerging markets looking vulnerable to a tightening of global financial conditions. However, their orthodox policy responses should put many countries in a stronger position to meet those challenges than previously, argue Carmen Altenkirch and Nafez Zouk.

    • What does the data say? Emerging-market debt in focus

      7 Oct. 2022

      In this month’s instalment of our visual series on topical themes, we look at some of the biggest recent trends in EMD.

    • EM corporate debt: Resilience in turbulent times

      23 Aug. 2022

      Emerging markets have been hit by stern economic challenges in 2022. But many companies are proving resilient thanks to strong fundamentals, as our emerging market corporate debt team explain.

    • EMD: On the bread line

      6 Jul. 2022

      Russia’s war in Ukraine has contributed to soaring food prices, supercharging global inflation. Poorer countries will likely be hardest hit, adding to the risk of social unrest. With public finances and incomes already under strain, emerging-market debt investors should be on high alert.

    • Conflict, commodities and China: The outlook for EMD

      13 May 2022

      Aaron Grehan and Nafez Zouk from our emerging market debt team explain how the asset class is standing up to some significant headwinds.

    • Lean on me: How can bond investors influence government climate action?

      25 Mar. 2021

      The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon.

    Explore our fixed income range

    High yield

    A range of strategies that aim to capture the full potential of high yield bond markets while protecting to the downside.

    Find out more  about High yield

    Climate Transition Credit

    A strategy seeking long-term, consistent excess returns and positive climate outcomes.

    Find out more  about Climate Transition Credit

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