Why Flexibility Matters More Than Benchmarks in Emerging Market Debt

RBC BlueBay argues that unconstrained investing offers a more effective way to navigate emerging market debt by exploiting valuation gaps, active asset allocation and risk management across the full opportunity set.

• The report argues that benchmark-driven strategies often miss attractive opportunities, while unconstrained portfolios can dynamically allocate across sovereign debt, corporate credit, local currency bonds and currencies.
• RBC identifies concentrated position sizing, active hedging and flexible portfolio construction as the key ingredients for generating stronger risk-adjusted returns through different market cycles.
• The firm also highlights the importance of exploiting off-benchmark opportunities and technical market dislocations, particularly in an asset class heavily influenced by geopolitical events and capital flows.

Read the full paper for RBC BlueBay's detailed framework on unconstrained emerging market debt investing and portfolio construction.