Trading Strategy Forum

Abstract

Within the traditional and alternative investment areas, debt in general and emerging market debt in particular have experienced declining investor interest during the past several years. The reduction of investors' interest in a trading strategy after that strategy has a poor relative performance compared to investors' other investment classes (e.g., equity) is not unusual. However, it is, perhaps, unfortunate. One reason for the relatively higher returns to emerging market debt with in the recent year is the return to liquidity providers. It is just after crises such as in August, 1990 that such risk premia are at there highest. As a result after certain investment shocks, it is not unusual for that strategy to experience positive returns. In this issue's trading strategy forum, two emerging market debt specialists, Hans Humes and Bruce Richards provide readers with a clearer and more informed understanding of the investment potential for emerging market debt in general and their firms' own particular approaches to capturing the return/risk tradeoffs within the emerging debt market asset class.