JP Morgan has introduced the first fixed income Next Generation markets index (NEXGEM), which keeps tracks of dollar-denominated government bonds issued by frontier markets in the wake of growing demand for exposure to next generation markets.
The new fixed-income benchmark index follows JP Morgan’s EMBI Global Diversified methodology and provides exposure to non-investment grade rated, smaller, less liquid population of emerging market economies.
NEXGEM includes 18 countries from Sub-Saharan Africa, Central American, the Caribbean, Middle East, Europe and Asia region.
Emerging Markets and Credit Research Global Head Joyce Chang said that due to high yield and continued growth momentum NEXGEM will continue to gain investor interest.
"We believe that countries have the potential to outperform the EMBI Global Diversified next year, delivering double-digit returns on the back of the current high yield of 8% for NEXGEM countries, stronger growth prospects compared to core EM and DM economies, and supportive technicals on the back of light investor positioning," Chang added.
EMBI Global Diversified is the widely used benchmark for investors in dollar-denominated emerging market government bonds.