30th November 2012
Emerging market government bonds are featuring increasingly in many investors' portfolios as some of the assumptions about developed market bonds’ safe haven status are questioned.
Fund manager Legal & General is launching a low cost passively managed bond index fund with an annual management charge of 0.3 per cent denominated in dollars.
The fund will follow the JP Morgan Emerging Markets bond index plus and will be managed by Lee Collins.
L&G Investments managing director Simon Ellis says: “Emerging market government bond funds represent a significant opportunity for investor portfolios, with yields that typically outstrip those of developed market government bond funds. They also act as a diversifier in portfolios with concentrated holdings of conventional gilts or corporate bonds.”
Many fund managers have suggested recently that the returns from safe haven government debt such as US treasuries, UK gilts and German bonds may underperform. HSBC suggested earlier this month that emerging market debt might represent an interesting alternative.
It is of course very sensible to consider how such an asset class fits with your attitude to risk. If you have an adviser it may make sense to talk to them about the asset class and its use as a diversifier.