Emerging markets are proving an attractive sector for fixed income portfolio allocations as a result of the high levels of inflation currently pervading all world economies and their proven ability to manage similar situations, a global fund manager has observed.

“In terms of the extraordinary environment that we’re in, something uncommon that’s happened is emerging market countries’ central banks have raised interest rates well ahead of developed markets. It’s normally the opposite,” Payden & Rygel director and portfolio manager Eric Souders noted.

“This time is different. Why? Because countries in emerging markets understand what inflation does to their economies, they understand what it does to their currencies, their growth, their ability to fund themselves externally.

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