Our International Fixed Income Team, including portfolio managers Tony Norris, Peter Wilson, Alex Perrin, and Michael Lee, discusses how the smaller, more dynamic economies of the world are likely to continue outperforming the larger, more mature economies that have been weighed down by low growth and massive deficits.
By now, most investors are very familiar with the challenges of reduced economic growth and large sovereign deficits in the United States and across Europe. But while these major economies have mostly languished in 2011, opportunities for fixed-income value from the smaller economies have quietly flourished. For several quarters we have maintained the opinion that the smaller, more dynamic economies of the world are likely to outperform the larger, more mature economies that have been weighed down by low growth, housing downturns, and massive deficits. That thesis has largely proved correct in 2011, and we see little reason for it to change in the upcoming quarters.