The performance of emerging market debt has beenq uite resilient over time. after crises in the debt markets, emerging amrket bonds quickly recover, so long-term returns can be poor. The answer states correct. I do not get why the long term returns can be poor, every reason is leading to good long term return. is this a typo?
Because they are already priced high so limited chance for gains other than coupon payments?
I concur with Chi Paul. You infer, probably from your own bias, that emerging market debt markets are efficient or undervalued. I think the intention of this exerpt is to point out that it is not, more so in the direction being overvalued. When crisis occurs, their value becomes more fair, but then the quick recovery only serves perpetuate the underperformance on some risk-adjusted basis.