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Active & Passive Emerging Markets Fixed Income Chart

Passive Investing Hurts Emerging-Market Debt Investors

19 February 2018
1 min read
EM Active Managers Have Historically Outperformed
EM Active Managers Have Historically Outperformed

As of December 31, 2017
Based on USD returns for managers in the eVestment Emerging Markets Fixed Income—Hard Currency Universe on a three-year rolling return basis.
Source: eVestment, J.P. Morgan and AllianceBernstein (AB)

Think emerging-market debt (EMD) might as well be managed passively? Think again.

Over the last 14 years, 69% of EMD active managers beat the J.P. Morgan EMBI Global over three-year rolling periods. Even in 2008, almost 40% of active managers beat their EMD benchmark.

That’s not just a run of good luck. Emerging markets are a rich source of opportunities for active managers and a potential minefield for passive investors. That’s because emerging markets contain, well, emerging opportunities and freshly developing risks.

So stay active in emerging markets. Because in EMD, passive investing may be cheap, but more often than not, it’s been costly.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

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