Returns evaporate from soft currency bonds

jueves 30 de julio de 2015 10:44 GYT

* Local currency bonds lose appeal

* Dollar strength battering EM FX

* Asia a rare bright spot

By Sudip Roy, Michael Turner and Daniel Stanton

LONDON, July 30 (IFR) - Leading fund managers are questioning the merits of investing in large pockets of emerging market local currency bonds, after years of poor returns look set to worsen with no reprieve expected for at least another 18 months.

A combination of looming US interest rate hikes, sliding commodity prices and jaded growth prospects are heaping pressure on the asset class.

Investors are becoming increasingly wary as renewed currency wobbles have helped depress returns further.

"Increasingly, local currency is not seen as a pure standalone investment," said Zsolt Papp, global head of emerging market debt client portfolio strategies at JP Morgan Asset Management.

JP Morgan's GBI-EM Global Diversified, which measures the performance of local currency bonds, is down 7.4% for the year up to July 28 in US dollar terms.   Continuación...