Emerging-market sovereign debt has rebounded sharply off the lows, but this hard-hit sector offers attractive yields and compelling growth opportunities to discerning investors.

Emerging-market debt has rebounded sharply off March lows, but attractive yields and compelling opportunities persist. We provide a roadmap for what may lie ahead.

Investors recognize that emerging markets are at the core of the global economy and belong in a fixed-income allocation. Still, many investors are underexposed to emerging-market corporate bonds. We think that’s a mistake.

The latest spike in trade tensions between the US and China raises the stakes for the G20 meeting in late June. It also has some investors questioning how China will manage growth as well as fiscal and monetary policy to keep stability through these uncertain times.

Emerging-market bonds got off to a strong start after a difficult 2018. Are more gains possible? We think so, and volatility sparked by increased trade tension may provide a buying opportunity for selective investors.

There’s no sugarcoating it: 2018 was hard on emerging markets. But as Nietzsche (and Kelly Clarkson) said, what doesn’t kill you can make you stronger. And as 2019 begins, we see many pockets of strength—and opportunity.

Summer is just beginning, but emerging-market (EM) bonds and currencies have been on a roller-coaster ride for months now. In markets, though, volatility breeds opportunity—and we still see plenty of that among EM issuers.

Following a strong 2017, emerging-market debt (EMD) held its own in January despite a sharp rise in US interest rates. That’s no accident. Economic fundamentals have improved dramatically, leaving EMD well positioned to withstand future turbulence.

Emerging-market bonds delivered strong returns last year, and we think the sector has more potential. In 2018, though, investors will have to exercise caution.

Afraid you’ve missed the rally in emerging-market (EM) assets? Don’t be. Responsible policies and pragmatic politics have taken hold in many developing countries. That bodes well for growth and suggests the rally has room to run.

Political fireworks from developed economies have been front and center for most investors. But under the radar screen, there’s been a healthy turnaround in emerging markets that’s generating appealing fixed-income opportunities.

For investors in search of a way to boost income and diversify their bond portfolios, now may be the time to consider what local-currency emerging-market bonds offer.

With inflationary pressures under control and external balances improving, many emerging-market (EM) countries are working on the next item on their to-do lists: reigning in fiscal deficits. That’s good news for emerging equities, dollar-denominated bonds and local-currency debt.

Higher interest rates, a stronger dollar and Donald Trump: three reasons to avoid emerging-market (EM) debt? Not necessarily. Rising rates seem to be signaling faster growth, and that’s good news for many EM bonds and currencies.

Still think emerging markets are too risky? Think again. Smarter policies are leading to less vulnerable economies and rising currencies. For investors who need to wring more income from their bond portfolios, it’s time for a fresh look.