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This strategy invests in debt instruments issued by sovereigns (government) and quasi-sovereigns (government sponsored) across a universe of 60-80 Emerging Markets.
Emerging Markets External Debt consists of dollar-denominated sovereign bonds issued under New York law. The asset class originally emerged out of the Brady Plan in the late 1980s and early 1990s and many investors still regard External Debt as the benchmark asset class in Emerging Markets fixed income.
Today External Debt is a USD1.4trn investment universe, complete with its own benchmark index, the JP Morgan’s EMBI Global Diversified Index, which has 54 countries and more than 325 securities.
On average, External Debt is now an investment grade asset class. Holders include the world’s largest institutional investors, central banks, sovereign wealth funds, and European and US pension funds, endowments, foundations, insurance companies, and others.
External Debt buys you into a global convergence story. You get exposure to a full range of credit qualities across Asia, Latin America, Eastern Europe, and new entrants from the Frontier markets, including Africa and 4-6 new issuers enter the asset class every year.
Ashmore currently offers this theme on a segregated account basis and via investment in commingled funds (Luxembourg SICAV, US mutual fund and private fund).