Now, GMO sees room for further gains, citing valuations, diversification considerations, and potential for outperformance.
GMO continues to have confidence in its once-in-a-generation recommendation on emerging market local debt, saying the trade and economic policies of US President Donald Trump’s administration make the bet even more attractive.
The firm first made the call in January 2024. Since then, the index tracking EM local currency government debt returns has risen more than 10%, outperforming the roughly 5% gain in investment-grade debt over the same period. However, the performance still lags behind the S&P 500, which has advanced 27%, and MSCI’s all-country stock index, up 25%.
