Emerging Market Bonds - First quarter 2023 review and outlook

Fixed Income Boutique
Watch 10 min

Wouter Van Overfelt, Head of Emerging Market Corporates and Luc D’hooge, Head of Emerging Markets Bonds, provide a review on the developments in the first quarter, the current positioning of the strategies as well as an outlook for the remainder of 2023.

Key takeaways

  • Following a strong start to the year, emerging-market bonds endured a difficult February and March amid negative sentiment which arose from inflation concerns and the banking crisis. This led to a rally in interest rates and a widening of credit spreads.
  • Vontobel’s Emerging Market Debt Strategy delivered an absolute performance of 1.50%, while our Emerging Market Corporate Bond Strategy ended the first quarter with -1.24%. Both strategies are lagging their benchmarks in the respective period.*
  • Relative underperformance of the strategies was driven by an underweight in duration and an overweight in high yield bonds.
  • Our market outlook for 2023 remains positive based on attractive absolute and relative valuations and better fundamentals in emerging markets compared to developed markets (widening growth differential).
  • Both strategies offer attractive portfolio valuations with yields significantly higher than the benchmark while maintaining a lower duration.

Emerging Markets Corporates

 

 

Emerging Markets Debt

 

 

 

 

 

 

* Past performance is not a guarantee of future results. Please refer to the presentation for additional performance results and other important information.

About the authors
van_ouverfelt_wouter

Wouter Van Overfelt

Head of Emerging Markets Bonds, Portfolio Manager
Related strategies
About the authors
van_ouverfelt_wouter

Wouter Van Overfelt

Head of Emerging Markets Bonds, Portfolio Manager
Topics:
Banks China Emerging Markets Emerging Markets Bonds Fixed Income Fixed Income Boutique Inflation Outlook US

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