Pimco Sees Value in Local EM Debt as Fed to Spark Yield Hunt.

According to Pacific Investment Management Co., local currency debt from emerging markets will offer the best returns for investors once the Federal Reserve begins lowering interest rates. This is because emerging-market policymakers have been cautious about easing cycles while US rates remained high. However, with the Fed expected to cut borrowing costs next month, investors will seek alternative sources of returns. The asset class has already seen an increase in performance, with emerging-market local currency debt delivering over 2.3% returns in August, the best month this year. Pimco's head of emerging-market debt, Pramol Dhawan, recommends investing in long-term rates in Latin America, as well as currencies and local bonds in countries like South Africa and Turkey. [Extracted from the article]