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Aberdeen says emerging market bonds are safe for cautious fund

Aberdeen’s multi-manager team has defended the introduction of an emerging market bond fund within its £244m cautious portfolio.
The team has added a 2 per cent holding in the BlueBay emerging market select bond fund managed by David Dowsett.

Aberdeen portfolio manager Rob Bowie says BlueBay Asset Management is a safe pair of hands, given its experience in emerging market debt, while the fund is also at the more cautious end of the market. He says although emerging markets are seen as high-risk, that issue is becoming less pronounced over time.

He says: “This is specifically the case in the fixed-income area. The budget deficits are clearly focused in the West whereas there are surpluses in the emerging markets, which offers greater stability.

“There is also greater currency strength and lower def-ault rates in corporates. I would not rule out adding to the position but we do have to be mindful that this is a cautious managed fund and we have to be aware of the overall risk in the portfolio.”

Hargreaves Lansdown senior analyst Meera Patel says: “They have a point, with emer-ging markets credit ratings now exceeding some countries in the West. The currencies in those countries are also expected to do well.”

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