Emerging Markets External Debt Strategy
Emerging Markets External Debt Strategy

Emerging Markets External Debt Strategy


The Emerging Markets External Debt Strategy is a value-oriented fixed income strategy that seeks high total return from income and price appreciation by investing in a range of Sovereign, Quasi-Sovereign and Corporate Debt securities in Emerging Markets. Investments are mostly denominated in U.S. currency, and, to a lesser extent, in non-U.S. and/or local currencies. To help achieve its objective, the strategy combines top-down country allocation with bottom-up security selection.


Expected Tracking Error
6.5-7.5 years
Typical Duration
Typical Yield to Maturity
Investment Approach

The team believes that Sovereign, Quasi-Sovereign and Corporate Debt securities of Emerging Markets that are undergoing positive fundamental change may present attractive investment opportunities. Further, historical data shows that the performance correlation of emerging market debt with other asset classes can be low, thus providing potential diversification benefits.1

The team aims to capture the upside potential of Emerging Market Debt securities through:

  • Country and security analysis
  • Value orientation
Global presence

The team is supported by Morgan Stanley’s presence in nearly every major financial market and region, drawing on the scale and scope of the firm’s global franchise to help manage risks and identify opportunities throughout market cycles.

Experience and complementary skill set

The team is comprised of investment professionals with complementary skills sets, which facilitate informed, well-researched investment decisions. MSIM has managed dedicated EMD assets since 1993, with the Head of the EMD effort being involved since 1997.

Morgan Stanley Investment Management’s structure

The firm’s structure allows for entrepreneurial flexibility, equipping the investment team with the liberty to respond quickly to market developments and swiftly implement investment ideas.

Investment Process
Macro analysis

The team begins with a top-down analysis of the global macro environment, its impact on EM, and the market’s appetite for risk. The output of the analysis is an overall risk target for all of our portfolios relative to their respective benchmarks.

Sovereign analysis

The team’s objective is to analyze countries’ ability and willingness to pay and identify countries that exhibit positive rates of change using frameworks that meld economic, political, and social assessments. We then compare our fundamental views with the market’s to identify value opportunities.

Security selection

The team’s models provide perspective on market valuations in different time periods, enabling them to identify potential mispricing and alpha opportunities. Each potential security is analyzed through a variety of valuation metrics.

Portfolio construction

The team uses a Positioning & Sizing framework that takes into consideration the total return potential of investment alternatives, the volatility of returns and correlation of such potential positions to assess risk, and a conviction factor about the return/risk trade-off based on a comprehensive review of event risk (including near-term political factors) and the market technicals such as planned issuance, investors’ positioning, and outlook for asset class flows. 

Risk management

Risk management is integrated throughout the team’s investment process. An independent team also monitors portfolio adherence to guidelines, overall risk levels, and composition.

Portfolio Managers
Managing Director
25 years industry experience
Managing Director
24 years industry experience
Executive Director
15 years industry experience
Global Fixed Income Insights
Emerging Markets Look Forward to 2019
Dec 17, 2018
2018 was a challenging year for emerging markets, but the market may be setting up the asset class for a rebound in 2019. The Emerging Markets Debt Team discusses.
Global Fixed Income Bulletin
Brave New Year
Jan 22, 2019
With a turbulent end to 2018, what will the New Year bring? The Morgan Stanley Global Fixed Income Team shares their outlook for investment opportunities in 2019.
Global Fixed Income Bulletin
November's Blues
Dec 14, 2018
As the weather has cooled, so have the markets. The Global Fixed Income Team shares their outlook for investment opportunities in 2019.