Investor risk aversion battered emerging market (EM) assets during the third quarter. Local currency and hard currency markets both posted negative gains and EM equities posted double digit losses.

Following positive performance in the first quarter, emerging markets (EM) came under pressure from macroeconomic factors in the second quarter, resulting in mixed returns for the asset class.

2015 kicked off with a rocky start for emerging markets: pending US rate hikes, falling commodity prices, quantitative easing in Europe, and idiosyncratic country risks all soured investor sentiment and caused the US dollar to soar. This led to substantial weakness in emerging market (EM) foreign exchange, pummeling US-based investors in many local currency bond markets. Despite that pain, EM credit performed well, and along with EM sovereign debt, posted positive gains.