Investors from JPMorgan Asset Management to Generali and Ninety One SA are loading up on emerging-market debt, defying a surge in Treasury yields that would once have sent them running for the exits.

Emerging bond funds have drawn 12 straight weeks of inflows, according to the latest Bank of America Corp. data based on EPFR Global, while investors surveyed by BofA this month named emerging stocks as one of their top trades even as most US yields have topped 5%.

Historically, EM assets buckled when faced with US monetary tightening, rising Treasury yields and the threat of another European debt crisis. This time though, investors are increasingly using weakness triggered by those factors as opportunities to add exposure. In fact, returns from EM bonds are nearly four times those from Treasuries since the start of last year.

This is because the current bout of global fixed-income anxiety is focused more on rich nations’ debt burdens and budget deficits, which helps drive up US, euro region and Japanese borrowing costs. In contrast, developing countries’ fiscal profiles generally look healthier.

“I just don’t think people own enough emerging markets,” Iain Stealey, chief investment officer for fixed income at JPM Asset Management, told a investor conference in London. He described the sector as among the “most constructive allocations” across the $4.3 trillion firm’s portfolios, adding that the firm will “continue to see assets deployed there.”

While emerging stock and bond indexes have outperformed developed-market peers this year, Stealey expects more gains as “people are looking to find ways of getting, maybe, out of developed market governments.”This ongoing switch helps explain why the extra yield investors demand to hold emerging bonds instead of Treasuries has barely budged this year even as investors dumped US bonds.

Read: Emerging Markets Can Weather Fed Risk After Oil Jump and War Another big shift is that investors are increasingly judging EM debt on its own merit, not mainly as a relative additional yield over Treasuries.

“The one thing we’ve done well over the last 18 months is not use Treasuries as our valuation metric,” said Peter Kent, co-chief investment officer of fixed income at Ninety One Asset Management, which recently added emerging debt exposure. “If you had, you would have stopped buying EM eight months ago, when spreads got quite tight.”While the developed world grapples with elevated debt levels, many poorer nations have strengthened their economic and policy frameworks, leaving them better equipped to withstand interest-rate shocks, said Guillaume Tresca, global EM strategist at Generali Asset Management.

“The global credit rating of EM countries is on the upward trend clearly. While on the other side, there have been many questions on developed-market countries, like France,” he said.

Budget deficits are smaller on average in emerging markets than in developed economies, according to strategists at UBS Group AG. Most governments have also reduced their vulnerability to the dollar by shifting more borrowing into their own currencies.

Many emerging-market central banks also moved earlier and more aggressively to tame price growth, leaving inflation-adjusted yields relatively high, according to Milana Muratova, at Aberdeen Investments. That’s helped bonds and currencies withstand the dollar’s rise.

That does not make emerging currencies immune to dollar strength, “but it does underline an important point: domestic fundamentals increasingly matter,” Muratova said.

Despite the rally, pockets of stress remain across the developing world. India has deployed a series of extraordinary steps to support its currency, while dollar borrowing costs have surged toward the 10% mark for several countries, including Mozambique, Sri Lanka and Ecuador.

For Eric Fine, head of active emerging markets debt at VanEck, India, Philippines and Thailand are markets where local debt yields are just not high enough. He favors instead the riskier, but higher-yielding dollar bonds of countries like Venezuela, Ecuador, Bolivia, Nigeria and Ghana.

EM debt has performed so well this year also because developing nations have had a lower capacity for taking on debt than advanced economies, which had helped curtailed their debt binges, according to Desmond Lawrence, senior investment strategist at State Street Global Advisors.

“The whole dynamic is changing,” Lawrence said. EM debt “will be an asset that’ll get you through the next few quarters. Its resilience has been remarkable.”What to