In this paper, we address key misconceptions about EMs that may be preventing investors from embracing this asset class, with a specific focus on hard currency EM sovereign debt. We highlight how EMD has evolved into a rapidly growing and maturing asset class, one which we feel deserves closer attention from investors seeking diversified and resilient portfolios with attractive long-term return potential.
Emerging markets (EMs) as an asset class have been accessible for over two decades, yet misconceptions surrounding them continue to deter some investors. Despite EMs accounting for over 60% of global gross domestic product (GDP)¹ and being home to over 80% of the world’s population,² investors are under allocated to the asset class. EMEA investors have on average a 5% allocation to emerging markets debt (EMD), while Latin American investors on average of 2%.³ Many miss the chance therefore to diversify their portfolios by not incorporating exposure to EMs.
¹ Source: IMF, DataMapper March 2026. GDP is in Purchasing Power Parity terms, US dollars.
² Source: United Nations, World Population Prospects, as at 2025.
³ Source: Portfolio Construction and Strategy team analysis on data from Janus Henderson EDGE™ for Europe inc. UK and Latin America from March 2025 to February 2026.
