World's safest returns signal pessimism in EM bonds is waning

London

LOOK anywhere in the world and you will be hard-pressed to find an investment that's as profitable and safe as the dollar-denominated bonds of higher-rated companies in developing nations.

Their 5.6 per cent rally this year, while not the biggest in absolute terms, eclipses more than 130 assets from US Treasuries to gold and even bitcoin when volatility is factored in, according to data compiled by Bloomberg. The 19 per cent jump in Colombian stocks might sound like a better deal, but price swings in Bogota exposed investors to six times more risk. When both factors are considered, the gains in emerging-market (EM) corporate dollar bonds come out twice as good, the data show.