Goldman Sachs says emerging market debt will maintain its appeal even after the Federal Reserve raises interest rates. There has been a noticeable outflow of funds from emerging markets in recent months, as investors weigh a slowdown in the Chinese economy and brace for a much-anticipated hike in U.S. interest rates.
The investment bank has been largely unmoved by the commotion within fixed-income markets. “The case for looking for yield in emerging markets remains intact,” said Yacov Arnopolin, a money manager who helps to oversee approximately US$36 billion of emerging-market debt at Goldman Sachs Asset Management. Continuing, Mr. Arnopolin also noted, “Spreads continue to look attractive to us, especially in the context of a persistent low-rate environment and lack of high-quality alternatives offering comparable yields.”
Still a great opportunity
Just because many are running scared, doesn’t mean that we all have to. There is still plenty of opportunity. In fact, there is more here for the hardy investor than there was before. The emerging-market fixed income team at German bank, Allianz echoed this sentiment, saying any sell-off caused by an uptick in U.S. interest rates should be viewed as a buying opportunity for investors
Don’t let the scare of a global slowdown or interest rate hike scare you. Find out more about the benefits of the Excel Emerging Market Fund today.