Reasons why series – Page 1 of 5

Reasons why: Emerging market debtFebruary 2017

For professional investors and financial advisers only – not for use by retail investors

Attractive yields in emerging market (EM) debt 1

2

Brett Diment

Head of Global Emerging Market Debt

“ Emerging market debt offers an attractive solution in a yield starved world”

Source: BP Statistical Review, World Steel Association, China Customs, Bloomberg, January 2017.

China is of far greater importance for commodities than the US

Yield (%)

EM HC Sovereign EM LC Sovereign DM Sovereign

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2010 2011 2012 2013 2014 2015 2016

Sovereign: JPM EMBI Global Diversified Index; EM LC Sovereign: JPM GBI-EM Global Diversified Index; DM Sovereign: JPM GBI Global Index.Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. Individuals cannot invest directly in an index. Past performance is not a guide to future results.Source: JP Morgan, 31 December 2016. For illustrative purposes only.

Commodity Consumption (%)

0102030405060708090

100

Copper Coal Aluminium Nickel Iron ore Zinc

China US Rest of world

• China is the world’s largest consumer for many commodities, and its consumption dwarves that of the USA

3

4

5

There has been a dramatic improvement in EM currency valuations

Source: International Monetary Fund, World Economic Outlook, October 2016. For illustrative purposes only.Diversification does not ensure a profit or protect against a loss in a declining market. Figures may appear not to add due to rounding. For illustrative purposes only.

Our investment process• We focus on the entire EM debt

universe to maximise the return potential and minimise risk.

• We conduct comprehensive country research, set in the context of global economic developments, which forms the foundation of our investment process.

• We look at factors such as:

• Key macroeconomic variables

• The political environment

• Fiscal and monetary policy developments and major risk.

• This is coupled with analysis of technical market indicators such as:

• The nature of instruments

• Relative value

• Liquidity

• Demand and supply imbalances.

Diversification

Emerging market resources

• The correction in EM currencies over the past five years is similar to the correction seen during the Asia crisis when EM currencies generally changed from fixed to floating exchange rates.

• At the start of 2016 EM currencies approached the bottom of their 20-year range.

The EM debt universe offers many attractive opportunities across hard currency sovereigns, quasi-sovereigns and corporates, as well as in local currency sovereigns and foreign exchange. We build diverse portfolios from the bottom up, investing in nearly 50 countries.

Percentage GDP growth, constant prices

-2-1012345678

202120202019201820172016201520142013201220112010Forecast

Euro area Major advanced economies (G7) Emerging market and developing economies

• Combined emerging market debt and equity expertise

• Local presence, with over 80 EM investment professionals worldwide

• $90bn in EM assets, with over $11bn in EM debt

• Over 80 countries and 1,000 companies researched

Source: Aberdeen Asset Management, 30 September 2016.

Budapest

SingaporeJakarta

Hong Kong

Bangkok

London

Sao Paulo

Kuala Lumpur

Sydney

Exceptional depth and breadth

Reasons why series – Page 2 of 5

Source: Aberdeen, BIS (Bank for International Settlements), 30 November 2016.GDP (Gross Domestic Product) weighted index of 14 emerging market countries.

70

75

80

85

90

95

100

105

Nov 16Nov 14Nov 12Nov 10Nov 08Nov 06Nov 04Nov 02Nov 00Nov 98Nov 96

Average real effective exchange rate in EM (ex-China, 2010=100)

Our strategiesOur investment process

EMD Plus invests in hard currency sovereign, quasi sovereign and corporate bonds, local currency sovereigns and currencies

Pooled fund: Aberdeen Global – Select Emerging Markets Bond Fund ($1,626m)

Aberdeen Global – Select Emerging Markets Investment Grade Bond Fund ($101m)

Benchmark: JP Morgan EMBI Global Diversified

AuM: $4,265m

EMD Local Currency invests primarily in local currency sovereign bonds and currencies

Pooled fund: Aberdeen Global – Emerging Markets Local Currency Bond Fund ($184m)

Benchmark: JP Morgan GBI-EM Global Diversified

AuM: $1,586m

EMD Corporate invests primarily in hard currency corporate bonds

Pooled fund: Aberdeen Global – Emerging Markets Corporate Bond Fund ($244m)

Benchmark: JP Morgan CEMBI Broad Diversified

AuM: $759mA

EMD Core invests primarily in hard currency sovereign and quasi sovereign bonds

No pool fund

Benchmark: JP Morgan EMBI Global Diversified

AuM: $ 1,587m

EMD Frontier invests in hard and local currency sovereigns, quasi-sovereigns and corporate bonds and currencies from frontier markets

Pooled fund: Aberdeen Global – Frontier Markets Bond Fund ($78m)

Benchmark: JP Morgan NEXGEM

AuM: $78m

Source: Aberdeen Asset Management, 30 September 2016.

$11bnin assets under management

A $1,157m including off benchmark allocations to EM corporates within our EMD Plus strategy.B $1,423m including allocations to Asian local currency strategy within the Asian Diversified Strategy and single country Thai and Indonesian funds.C $994m including allocations to Asian credit within the Asian diversified strategy.

Source: Aberdeen Asset Management. 30 September 2016.Notes: EMD (Emerging Market Debt); EMBI (Emerging Market Bond Index); CEMBI (Corporate Emerging Market Bond Index); NEXGEM (Next Generation Markets Index); WGBI (World Government Bond Index); ALBI (Asian Local Bond Index).

Reasons why series – Page 3 of 5

EMD Total Return invests in hard and local currency sovereigns and quasi sovereign bonds (more than 50% government owned) and currencies from emerging market and develop market countries

Pooled fund: Aberdeen Global II – Emerging Markets Total Return Bond Fund ($59m)

Benchmark: Citigroup WGBI US

AuM: $68m

Asian Local Currency invests primarily in Asian local currency denominated bonds

Pooled fund: Aberdeen Global – Asian Local Currency Short Duration Bond Fund ($206m)

Benchmark: iBoxx Asia ex Japan Sovereign 1 - 3y

AuM: $962B

Asian Credit invests primarily in hard currency bonds issued by Asian corporates

Pooled fund: Aberdeen Global – Asian Credit Bond Fund ($30m)

Benchmark: JPMorgan Asia Credit Index

AuM: $886mC

Asian Diversified invests in hard and local currency sovereigns, quasi-sovereigns and corporate bonds and currencies from Asian countries

Pooled fund: Aberdeen Global II – Asian Bond Fund ($80m)

Vehicle domiciled in US ($30m)

Benchmark: Markit iBoxx ALBI

AuM: $217m

Single Country invest primarily in local currency sovereign, quasi-sovereign and corporate bonds

Pooled fund: Aberdeen Global – Indian Bond Fund ($80m)

Vehicles domiciled in Thailand ($224m), Indonesia ($48m)

AuM: $391m

The investment team

Asian Fixed IncomeEMD Sovereign

Kevin Daly (28) (L)Viktor Szabó (16) (L)Andrew Stanners (16) (L)Anthony Simond (8) (L)Patty Cao (5) (L)Imre Tajti (14) (B)

Kenneth Akintewe (16) (S)Leong Lin Jing (7) (S)Lee Jin Yang (5) (S)Edmund Goh (7) (KL)Pongtharin Sapayanon (14) (BK)Suhardi Tanujaya (22) (J)

Thomas Drissner (14) (S)Gareth Nicholson (13) (S)Jeremy Teng (10) (S)Carol Yuan (10) (SY)Henry Loh (3) (S)Mohammad Hasif (6) (KL)Tai Li-Yian (3) (K)

Max Wolman (17) (L)Paul Lukaszewski (16) (L)Kathy Collins (9) (L)Samuel Bevan (5) (L)Henrique Morato (3) (L)Wendy Tjandra (18) (J)

Adam McCabe (16) (S)Head of Asian Fixed Income

Edwin Gutierrez (21) (L)Head of EMD Sovereign

Siddharth Dahiya (11) (L)Head of EMD Corporate

EMD Corporate

Sovereign Corporate

Brett Diment (25) (L)Head of Global EMD

Specialised Resources

Portfolio AnalystsNeil Clayton (12) (L)May Hoang (8) (L)

QuantEcho Yang (9) (S)

DealersAndrew Ng (10) (S)

Abel Koh (5) (S)Russell Beer (15) (L)

Restructuring & Insolvency

Cecely Hugh (10) (L)

Product SpecialistsKaren Bater (32) (P)

Helen Winter (20) (L)

Global interaction:

• Team-based, formal weekly portfolio review and six-weekly strategy meetings

• Regular meetings with EM equity, global macro and US fixed income teams

(-) denotes years industry experience. L= London, B = Budapest, S = Singapore, KL = Kuala Lumpur, BK = Bangkok, J = Jakarta, SY = Sydney Source: Aberdeen Asset Management, 30 September 2016.

Experienced, stable team with a broad range of specialist skills

Reasons why series – Page 4 of 5

Reasons why series – Page 5 of 5 MLD ref: 25750-010217-1121026909 02/17

The value of investments and the income from them can go down as well as up and your clients may get back less than the amount invested

Contact detailsShould you require any further information, please visit aberdeen-asset.com for details of your local Aberdeen representative.

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