M&G Emerging Markets Bond fund page - The Adviser Centre (2024)

FAQs

Are emerging market bonds a good investment? ›

Among the opportunities in the fixed income markets in 2024, local-currency EM bonds may be one to consider for investors with a higher risk tolerance. The relatively high yields and likelihood of rate cuts by global central banks have created a tactical investment opportunity.

M&G Performance Summary

Our analysis of the 53 funds managed by M&G identified that 49% received a poor performing 1 or 2 star rating with the majority (31%) receiving a modest 3 star rating.

Vanguard's active fixed income team believes emerging markets (EM) bonds could outperform much of the rest of the fixed income market in 2024 because of the likelihood of declining global interest rates, the current yield premium over U.S. investment-grade bonds, and a longer duration profile than U.S. high yield.

When basic caution is exercised, the rewards of investing in an emerging market can outweigh the risks. Despite their volatility, the most growth and the highest-returning stocks are going to be found in the fastest-growing economies.

The top picks for 2024, chosen for their stability, income potential and expert management, include Dodge & Cox Income Fund (DODIX), iShares Core U.S. Aggregate Bond ETF (AGG), Vanguard Total Bond Market ETF (BND), Pimco Long Duration Total Return (PLRIX), and American Funds Bond Fund of America (ABNFX).

Prudential is part of M&G plc. See our companies and their registration numbers. Registered in Ireland.

M&G Plc has a conensus rating of Moderate Buy, which is based on 3 buy ratings, 2 hold ratings and 1 sell ratings. The average share price target for M&G Plc is 243.11p. This is based on 6 Wall Streets Analysts 12-month price targets, issued in the past 3 months. M&G Plc's analyst rating consensus is a Moderate Buy.

GB:MNG pays a dividend of 13.2p per share. GB:MNG's annual dividend yield is 9.43%. When is M&G Plc ex-dividend date? M&G Plc's previous ex-dividend date was on Mar 28, 2024.

High Yields Could Lead to Strong Returns

Indeed, emerging markets debt high-yield credit spreads have been very attractively valued against high-yield spreads in other asset classes, such as U.S. credit or European credit. That, in turn, translates into higher-yield levels for emerging markets debt.

How big is the emerging market bond market? ›

The EM bond market measures USD 29.6trn, or 25% of the global bond market. The market, which comprises both government and corporate bonds, is equivalent to 85% of EM GDP. The EM government bond market is USD 13.0trn (44% of the total), while the corporate bond market is USD 16.6trn (56% of the total).

Emerging market debt (EMD) is a versatile asset class, providing a potential yield pick-up opportunity for those fixed income investors willing to move out the risk spectrum.

Economic risk.

These markets may often suffer from insufficient labor and raw materials, high inflation or deflation, unregulated markets and unsound monetary policies. All of these factors can present challenges to investors.

After a difficult year in 2023, we're seeing signs that a recovery may be brewing for emerging-market (EM) equities. For investors to regain confidence, it's important to revisit some common assumptions about EM stocks with a critical eye.

Contrary to recent experience, over the last 25 years, emerging market equity returns have generally outpaced their developed market peers. Since the end of 1998, the S&P 500 has delivered a 7.55% annualized total return, just behind emerging markets at 7.83%.

While there are literally dozens of emerging markets, investors have long been enamored with a group called the BRICS: Brazil, Russia, India, China and South Africa. These five countries' collective GDP actually began to surpass the G7 (Canada, France, Germany, Italy, Japan, the U.K. and the U.S.) in 2020.

There are indications that interest rates may start to fall in the near future, with widespread anticipation for multiple interest rate cuts in 2024. Falling rates offer the potential for capital appreciation and increased diversification benefits for bond investors.

U.S. government and agency bonds and securities carry the "full faith and credit" guarantee of the U.S. government and are considered one of the safest investments. What that means: regardless of war, inflation or the state of the economy, the U.S. government pays back its bondholders.

Bonds that are rated below investment grade (that is, BB or lower by S&P, Ba or lower by Moody's) are sometimes called "junk" bonds. ² They may be appropriate for investors who can withstand higher price volatility and default risk while seeking increased investment cash flow potential.