Sovereign Reversal: Why institutional allocators are rewriting the EMD playbook

For a generation of institutional asset allocators and investors, emerging market debt (EMD) was bound by a predictable, cyclical script. It was the ultimate "risk-on" satellite allocation: an asset class to be courted when spreads looked cheap and abandoned the moment volatility rose. At the first whisper of geopolitical friction, inflationary pressure or developed market tightening, investors routinely rushed back to the perceived safety of Developed Market sanctuaries.

The cio investment club hosted an exclusive roundtable in London in July. The discussion brought together leading institutional asset owners, consultants and fund managers to debate whether EMD has transitioned from a cyclical trade to a resilient, strategic, core portfolio allocation.