Frontier sovereign debt shows lower volatility than broader emerging markets, Momentum says
TLT•Momentum Global Investment Management’s October 19 analysis found frontier sovereign debt historically less volatile than broader emerging-market government debt. It said combining the bonds may reduce portfolio volatility while preserving long-term return potential.
1. Volatility analysis
Momentum Global Investment Management said frontier sovereign debt has historically shown lower volatility than broader emerging-market government debt. The analysis said strong domestic investor bases can insulate frontier markets from global capital outflows, making prices more sensitive to country-specific fundamentals, and favored combining emerging-market and frontier sovereign bonds to reduce portfolio volatility while preserving long-term return potential.
