While Ashmore forecast an ultimate return of inflation as money flowed back into these countries, it also claimed inflation appeared benign for the time being.
“This [set of declines] bodes well for prospects of rate cuts and further returns to holders of local currency bonds,” predicted the asset manager.
These comments come at a moment of resurgence for emerging market investing. The region, much maligned over recent years, has seen its equities perform well year to date. Similarly, investors have renewed their focus on emerging market debt as they continue to hunt for yield.
Such dynamics would serve well, theoretically, for a longer-duration approach in emerging market countries. But this may prove convoluted.
In the first instance, long-duration plays may be harder to implement here, because emerging markets tend to have shorter duration than issuers in their developed counterparts.
Additionally, commentators have pointed to the heightened risk of investing in the space.
Ms Hutchison described emerging market duration calls as ‘complex’, adding: “Inflation is clearly an important factor but economic growth dynamics are just as important.
“Many emerging markets have been in an economic downturn for a protracted period, with falling inflation an inevitable consequence of diminished economic activity.
"The ability to service the debt through stronger economic activity is just as relevant as the direction and rate of inflation in emerging markets.”
Mr Preskett suggested a long-duration play made sense if the direction of travel for inflation was downward. But he issued a similar note of caution.
“One needs to consider the total portfolio impact and the currency and credit risk they accept by taking an active stance on duration,” he added.
Dave Baxter is deputy head of news for Investment Adviser
