Emerging markets have been out of favour with mainstream investors since the series of financial shocks in the late 1990s that culminated with the default by Russia on its sovereign bonds in 1997. So what has changed since then, to bring emerging market debt back into favour (with a number of new products being released that provide exposure to emerging market debt)?

As Figure 1 below shows, emerging market debt has been providing solid returns since the late 1990s, outperforming major asset classes like US equities and bonds.