Emerging markets must be included in the core part of a well-constructed bond portfolio, according to Aberdeen Asset Management global head of fixed income Paul Griffiths.
"Emerging markets have largely emerged and the developed markets are submerging, and to that end how you position your global portfolio to your clients is by no means simply a relative to developed markets bond index-type exposure," Griffiths said.
"One has got to look at emerging economies more broadly," he said.
As such, Aberdeen has been positioning its fixed-income portfolios away from the peripheral European economies, especially the PIGS [Portugal, Ireland, Greece and Spain].
This approach does not mean the Aberdeen bond portfolios have no exposure to these countries, but does mean they are underweight in their allocations to these markets.
Of particular concern to Aberdeen is Spain's economy.
"This is largely because of the amount they owe to other European economies such as France, Germany, and Italy ... that is of significant concern," Griffiths said.
In regard to developed economies, he said Aberdeen's overweight positions are in the relatively smaller markets such as Australia.
"We also favour the Asian economies to the emerging Latin American economies," he said.
"In Asia we like Indonesia, Korea - both are very important for us and both are very interesting."
