EM Carry Trades Extend Winning Streak to Seven Quarters

Cathy Hepworth, head of PGIM's emerging-markets debt team, highlights carry trades as her highest-conviction theme across developing markets.

'It's a carry world,' she says, referencing a popular but often risky trade where investors borrow cheaply in currencies like the US dollar and put the money to work in higher-yielding currencies like the Turkish lira.

The emerging-market carry trade has returned about 22% since the end of 2024, beating all other major classes of global bond trades, according to a Bloomberg gauge of eight major EM currencies.