An equity investor typically follows the definition of an index provider such as MSCI to classify a country into one of three categories: developed, emerging, or frontier market. For MSCI to classify a country in emerging markets, its market would need to meet minimum thresholds for economic development, market size, and liquidity, but still show certain limitations in accessibility for international investors, which developed markets do not have (e.g. capital flow restrictions, foreign ownership limits, or operational inefficiencies). The third category, frontier markets, falls below emerging standards in size, liquidity, and institutional robustness.

We made our biannual pilgrimage to Washington, D.C. to attend the IMF/World Bank Annual Meetings in mid-October. The meetings give the opportunity to catch up with policymakers, analysts, academia, and other investors, and allow us to debate the global macroeconomic outlook and grasp global investor sentiment.

Emerging market debt offers yield, diversification and a different risk mix from developed market bonds. It is an attractive offering, but that is not to say it is a straightforward asset class. Emerging market debt in local currency is not for everyone, but for many multi-asset and fixed-income portfolios it can play a valuable role. It can lift income, add currency exposure and diversify developed market rate risk. The key is to be selective, disciplined and transparent about how decisions are made.