“We would absolutely recommend emerging markets and emerging market local debt,” Jonathan Xiong, head of fixed income alternatives at Goldman Sachs Asset Management, told CNBC.
He told CNBC’s “Street Signs” on Monday, that bond markets in the U.S. and Europe do not offer substantial liquidity premiums, making emerging markets especially appealing.
“EM looks quite attractive. High real rates, positive growth, cheap from a purchasing power parity valuation perspective,” he said.
But not everyone shared the same enthusiasm when it came to investing in emerging markets. For one, Jason Ambrose, founder and CEO of Vanda Research told CNBC that if there’s one place that’s extremely crowded, it’s the emerging market trade.
“The real big crowded trade of any asset class … is long EM, particularly in equity markets but also in currencies,” he said, adding that emerging markets are still quite sensitive to U.S. dollar strength.
Greenback strength is often seen as a big negative for emerging markets, as not only does it depress the value of their commodities, but also hikes U.S. dollar-denominated debt.
The dollar, however, has retreated since its 14-year peak back in January. Year to date, the greenback has lost 4.3 percent against other currencies.
