Aberdeen Investments reports that it is now seeing positive momentum across its Emerging Market Debt strategies, with assets under management rising from $20 billion at the end of 2024 to $22.4 billion as of 30 September 2025. This growth has been driven by active investment performance and $0.9bn of net inflows across Aberdeen’s EM corporate, local currency, and frontier market strategies.
Frontier debt strategies have been a described as a bright spot, “with AUM reaching appr. $1.8 billion.” This includes a mix of institutional and retail inflows, reflecting “confidence in Aberdeen’s approach to frontier markets.”
The positive momentum reportedly comes as Aberdeen Investments also won a large “$500m blended EMD mandate from a US public pension plan, encompassing hard currency sovereign and corporate debt, local currency sovereign debt, and up to 10% in EM private credit.”
This marks a shift from the previous market cycle, where many US investors had “moved away from EMD, sometimes in favor of private credit.”
The renewed interest in the asset class reflects a “reappraisal of EM assets, driven by the attractive income they offer, rather than expectations of price gains through spread compression.”
Continued rate cuts in emerging markets combined with “anticipated further weakening of the US Dollar should also be positive for EM Local Currency bond returns. ”
Siddharth Dahiya, Global Head of Emerging Markets Debt, Aberdeen Investments, said that they are seeing a resurgence of interest in sub segments of EMD this year across “institutional and wholesale channels.”
Investors are beginning to take note of some of the “strong fundamentals and structural tailwinds that underpin this market.”
Dahiya added that as central banks across the developed world continue to cut policy rates, EMD becomes even more “essential to meeting clients’ return objectives.”
Ginny Richardson, Global Head of Strategy and Fixed Income Investment Specialists, Aberdeen Investments, said that they are seeing “a meaningful shift in sentiment toward emerging market debt.”
They also pointed out that investors are increasingly recognising “the value of the asset class for its yield and return potential, especially in a world where developed market rates are heading lower.”
Richardson also stated that the turnaround in flows, “especially in hard currency sovereign debt and local currency strategies, is a testament to the resilience and attractiveness of emerging markets.”
They further noted that they believe this momentum looks set to continue as investors seek income and diversification.”
Investor appetite for EMD comes amid a supportive macro environment. Lower interest rates in the US are helping “lift investor sentiment toward EM and giving central banks in some EM countries greater flexibility to prioritise growth.”
Market-wide flows are also turning positive.
According to JP Morgan, EM hard currency sovereign bonds “have recorded 11 consecutive weeks of inflows since early April, recovering from -$9.8 billion to +$4 billion year-to-date.”
This marks a turnaround from “consecutive years of outflows: -$44.8 billion in 2022, -$22.3 billion in 2023 and -$16.3 billion in 2024.”
Local currency strategies benefited from “strong performance and renewed investor interest.”
The JP Morgan GBI Global Diversified Index has returned over “15% year-to-date (as of 10 Oct 2025), with FX gains contributing more than 6%.”
Industry-wide fund flows into LC strategies “exceeded $7 billion, a notable improvement from previous years.”
Further highlighting the sector’s ongoing recovery, cross-border EMD active net sales reached “a 31-month high in August.”
Overall, the EMD sector has posted net positive flows of “£8 billion year-to-date, compared to a net outflow of -£5.8 billion over the same period last year.”