J.P. Morgan launches the first fixed income frontier markets index, the NEXGEM
Dec 13, 2011
New York – J.P. Morgan today announced the introduction of the first fixed income Next Generation markets index, which tracks dollar-denominated government bonds issued by frontier markets. The new index, J.P. Morgan Next Generation Markets Index (NEXGEMSM), is a fixed-income benchmark that provides exposure to non-investment grade rated, smaller, less liquid population of emerging market economies.
“Growing demand for exposure to Next Generation markets is part of the expansion and deepening of the emerging markets debt asset class. The focus on Next Generation markets is expected to continue as investors seek diversification and higher yields. With NEXGEM we will provide investors with a well-defined and diligently-managed benchmark for these markets within the emerging markets framework,” Gloria Kim, J.P. Morgan’s Head of Global Index Research said. “It continues a legacy of premier index products developed by J.P. Morgan and underscores the firm’s dedication to developing emerging markets,” Kim added.
NEXGEM closely follows the methodology of J.P. Morgan’s EMBI Global Diversified, which is the most widely used benchmark for investors in dollar-denominated emerging market government bonds. NEXGEM selects countries from this benchmark that meet our criteria for Next Generation Markets. Today, NEXGEM includes 18 countries representing Sub-Saharan Africa, Central American, the Caribbean, Middle East, Europe and Asia: Belarus, Belize, Dominican Republic, Ecuador, Egypt, El Salvador, Gabon, Georgia, Ghana, Iraq, Ivory Coast, Jamaica, Jordan, Nigeria, Pakistan, Senegal, Sri Lanka, and Vietnam. Allocation to Next Generation markets will likely increase as investors seek diversification and higher yields. NEXGEM serves as a tracker for these markets.
“Next Generation emerging markets will continue to gain investor interest due to high yields and continued growth momemtum,” Joyce Chang, Global Head of Emerging Markets and Credit Research, said. “We believe that NEXGEM 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,” added Chang.
A 10 year history for daily index levels and statistics are available from December 31, 2001 for the aggregate, regional, country and rating bucket subindices of NEXGEM. Clients and investors can access index levels and statistics for the NEXGEM on www.morganmarkets.com and Bloomberg page JPMX.