Emerging market debt has produced volatile returns over the years. According to the J.P. Morgan EMBI Global Diversified Composite index, the year-over-year total return was -6.8% and -5% in March and April 2020, respectively. Looking at this year, March and April's returns were 16% for each month, albeit compared with the depressed levels in the year-ago period. Nonetheless, the index posted positive returns from May 2020 onward.
Emerging market debt attracting money
Money flows into emerging market debt securities soared to $31.2 billion in April, according to the Institute of International Finance, rebounding from a $3 billion inflow the prior month. Emerging markets in Asia accounted for nearly half of last month's total, with Latin America representing 25%. The balance was split among emerging markets in Europe and Africa and the Middle East. Examining the flows at the country level, China attracted $13.5 billion. Last March, when the pandemic took hold, $34.8 billion flowed out. However, it quickly reversed coursed in the following months, including $67 billion and $65 billion in October and November, respectively, the highest totals in at least 15 years.