Skip to content

CONTRIBUTORS

Michael Hasenstab, Ph.D.

Chief Investment Officer, Templeton Global Macro

Calvin Ho, Ph.D.

Senior Vice President, Portfolio Manager, Director of Research, Templeton Global Macro

Executive summary:

  • Foundational improvements in market structure and policy frameworks have strengthened emerging markets’ (EM) resilience to external shocks. As many EM countries have adopted more prudent monetary and fiscal policies, they are also increasingly distinguishing themselves from major advanced economies.
  • In our view, treating EM debt primarily as a tactical allocation is increasingly disconnected from the maturation and resilience of the asset class. While EM debt should not necessarily become the single core building block of a portfolio, we see merit in considering it as a structural component of a long-term, diversified investment strategy.
  • Within the context of a broader portfolio, EM debt exposure can provide consistent yield advantages and distinct return drivers to support income generation and portfolio diversification. However, heterogeneity across countries makes an active, country-by-country approach critical.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks.

Equity securities are subject to price fluctuation and possible loss of principal.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls.

Floating-rate loans and debt securities are typically rated below investment grade and are subject to greater risk of default, which could result in loss of principal.

Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

There is no assurance that any estimate, forecast or projection will be realized.

WF: 10603809

IMPORTANT LEGAL INFORMATION

Information on this website is intended to be of general information only and does not constitute investment or financial product advice. It expresses no views as to the suitability of the products or services described as to the individual circumstances, objectives, financial situation, or needs of any investor. You should conduct your own investigation or consult a financial adviser before making any decision to invest. Please read the relevant Product Disclosure Statements (PDSs), and any associated reference documents before making an investment decision.

Neither Franklin Templeton Australia, nor any other company within the Franklin Templeton group guarantees the performance of any Fund, nor do they provide any guarantee in respect of the repayment of your capital. In accordance with the Design and Distribution Obligations, we maintain Target Market Determinations (TMD) for each of our Funds. All documents can be found via the Literature Page or by calling 1800 673 776. 

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.