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JPMorgan: Inflows into EM bond funds set to halve in 2020

After a stellar year for emerging market bonds in 2019, the world’s largest EM bond house says returns don’t look so rosy for 2020.


Emerging market dedicated bond fund inflows are expected to fall by over half in 2020 on account of less accommodative monetary easing and rising EM country risks, according to JPMorgan. Inflows are predicted to slow to around $30 billion, down from around $65 billion in 2019, according to analysts at the bank.

With a peak of $17 trillion of global bonds offering negative returns in 2019, investors turned to EM bonds to pick up yield, prompting above-trend demand for the asset class last year. Now bankers expect a rebalancing.

“Developed market and emerging market monetary easing is likely to be less supportive… and our modest return forecasts for 2020 point to lower return-following EM bond flows,” say the JPMorgan analysts. “For institutional investors, we expect below-average strategic flows despite the global search for yield, given EM country risks and late-cycle concerns.”


The challenge for EM returns comes from the starting point of a strong 2019 performance driven by the substantial fall in global yields, which is unlikely to be repeated.

EM sovereigns returned 12.4%, corporates 12.1% and EM local bonds 9.7%

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