Expert Panel

It has been an eventful year so far for emerging market debt. Investors have enjoyed strong returns in US dollars, with the JPM GBI-EM Global Diversified index gaining 11.4 percent through July. India’s weighting in the benchmark has increased, but not all fund managers are equally enthusiastic about the country’s prospects.

The fee structure of an investment fund is more than a contract: it is a barometer of trust between fund manager and investor. Nothing frustrates a client more than paying a performance fee in a year with a negative total return, even if the manager has outperformed the benchmark.

Historically, US smallcaps have outperformed their European peers, with a difference of about 1.5 percent to 2.5 percent over 5-, 10- and 15-year periods, depending on the timeframe. In the first seven months of 2025, however, the situation has been reversed.

In recent years, global equity markets have been driven by the performance of largecaps, particularly in the technology sector, leaving smallcaps behind. That was the case in 2024, for example, when the Morningstar Global TME Index gained 25 percent while the Morningstar Global Small TME Index managed only a 16 percent increase.

The Belgian Program Act of July 18, 2025 introduces several changes to the annual tax on securities accounts (JTER), also known as the securities tax. The law now provides for new anti-abuse rules and a reporting obligation for certain transactions.

In a year marked by political divergence on climate, Morningstar compares two Article 8 high-yield bond funds navigating Europe’s evolving ESG landscape: Abrdn Euro High Yield and Columbia Threadneedle European High Yield.

The second quarter of 2025 provided ample opportunity for tactical trades, as markets whipsawed in every direction. Inflation fears broke out following Liberation-Day tariff announcements from the US, which led to a rapid spike in bond spreads. Spreads then normalized as a 90-day suspension on tariffs kicked in. Even so, global high-yield bond yields stood at 6.9 percent at the end of June, well above the 6.4 percent average over the past five years.

Local emerging-markets debt strategies took a beating in the last quarter of 2024 but recovered spectacularly in dollar terms in the first half of 2025 with the widely-used JPM GBI-EM Global Diversified index recording a return of 13 percent for the six-month period.

Emerging markets extended their strong start to the year with another solid quarter. The Morningstar EM TME Index rose nearly 3 percent in Q2, outpacing the Morningstar Global TME Index, which gained 2.5 percent. As a result, emerging markets have now widened their outperformance over developed markets to nearly 4 percent year to date.

Global equity investors faced a challenging first half of the year. An optimistic start quickly gave way to turmoil as President Trump’s trade war and escalating geopolitical tensions unsettled markets.