Aberdeen Investments sees renewed momentum in emerging market debt
19 November 2025Aberdeen Investments sees renewed momentum in emerging market debt as investors search for yield and USD weakness sparks increased interest.
• Aberdeen Investments sees assets in EMD strategies rise to $22.4bn, with strong inflows to EM corporate, local currency and frontier market strategies
• Renewed interest in EMD amid broader repraisal of asset class, driven by attractive yield compared to developed markets
Aberdeen Investments is seeing positive momentum across its Emerging Market Debt (EMD) strategies, with assets under management (AUM) rising from $20 billion at the end of 2024 to $22.4 billion as of 30 September 2025*.
This growth has been driven by a combination of active investment performance and $0.9bn of net inflows across Aberdeen’s EM corporate, local currency (LC), and frontier market strategies.
Frontier debt strategies have been a particular bright spot, with AUM reaching approximately $1.8 billion. This includes a mix of institutional and retail inflows, reflecting broad-based confidence in Aberdeen’s approach to frontier markets.
The positive momentum comes as Aberdeen Investments also recently won a large $500m blended EMD mandate from a US public pension plan, encompassing hard currency sovereign and corporate debt, local currency sovereign debt, and up to 10% in EM private credit.
This marks a shift from the previous market cycle, where many US investors had moved away from EMD, sometimes in favour of private credit. The renewed interest in the asset class reflects a broader reappraisal of EM assets, driven by the attractive income they offer, rather than expectations of further price gains through spread compression. Continued rate cuts in emerging markets combined with anticipated further weakening of the US Dollar should also be positive for EM Local Currency bond returns.
Siddharth Dahiya, Global Head of Emerging Markets Debt, Aberdeen Investments, said:
“We are seeing a resurgence of interest in all sub segments of EMD this year across institutional and wholesale channels. Investors are beginning to take note of some of the strong fundamentals and structural tailwinds that underpin this market. As central banks across the developed world continue to cut policy rates, EMD becomes even more essential to meeting clients’ return objectives.”
Ginny Richardson, Global Head of Strategy and Fixed Income Investment Specialists, Aberdeen Investments, said:
“We’re seeing a meaningful shift in sentiment toward emerging market debt. Investors are increasingly recognising the value of the asset class for its yield and return potential, especially in a world where developed market rates are heading lower.
“The turnaround in flows, especially in hard currency sovereign debt and local currency strategies, is a testament to the resilience and attractiveness of emerging markets. We believe this momentum looks set to continue as investors seek income and diversification.”
Supportive environment for EMD
Investor appetite for EMD comes amid a supportive macro environment. Lower interest rates in the US are helping lift investor sentiment toward EM and giving central banks in some EM countries greater flexibility to prioritise growth.
Market-wide flows are also turning positive. According to JP Morgan, EM hard currency sovereign bonds have recorded 11 consecutive weeks of inflows since early April, recovering from a low of -$9.8 billion to +$4 billion year-to-date. This marks a sharp turnaround from three consecutive years of outflows: -$44.8 billion in 2022, -$22.3 billion in 2023 and -$16.3 billion in 2024.
Local currency strategies have also benefited from strong performance and renewed investor interest. The JP Morgan GBI Global Diversified Index has returned over 15% year-to-date (as of 10 October 2025), with FX gains contributing more than 6%. Industry-wide fund flows into LC strategies have exceeded $7 billion, a notable improvement from previous years.
Further highlighting the sector’s recovery, global cross-border EMD active net sales reached a 31-month high in August. Overall, the EMD sector has posted net positive flows of £8 billion year-to-date, compared to a net outflow of -£5.8 billion over the same period last year**.
ENDS
*Includes amounts reported within Aberdeen Investments’ Insurance Partners business
**Source: Broadridge, October 2025
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Notes to editors
About Aberdeen Investments:
Aberdeen Investments is a specialist asset manager that focuses on areas where we have both strength and scale across public and private markets, including credit, specialist equities and real assets.
Our teams collaborate across regions, asset classes and specialisms, connecting diverse perspectives and working with clients to identify investment opportunities that suit their needs.
As at 30 September 2025, Aberdeen Investments managed c.£382bn on behalf of clients, including insurance companies, sovereign wealth funds, independent wealth managers, pension funds, platforms, banks and family offices.
www.aberdeeninvestments.com
About Aberdeen Group
Aberdeen is a leading Wealth & Investments group, working to help millions of customers and clients turn their financial goals into reality. As at 30 September 2025, Aberdeen managed and administered c.£542bn of client and customer assets across its three core business, interactive investor, Adviser and Investments.
www.aberdeenplc.com
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