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Switch from Eurozone IG bonds to EM IG EUR-denominated bonds
15 July 2016
Years of selective buying of Eurozone bonds by central banks and institutional investors has created a
strong relative value proposition in favour of Emerging Markets (EM) EUR-denominated bonds.
Investment grade (IG) EUR-denominated sovereign bonds now offer sharply better expected returns
and lower volatility than Eurozone sovereign bonds. We recommend that investors rotate out of the
latter into the former.