Diving into the riskiest parts of Europe’s government bond market proved to be a clear winner this year.

Some of the world’s biggest money managers say 2016 will be no different.

BlackRock Inc., Pacific Investment Management Co. and Prudential Financial Inc. all say debt from Europe’s peripheral nations -- those less-creditworthy borrowers such as Portugal, Italy and Greece -- are primed to excel once again as the European Central Bank extends its unprecedented bond buying. With the Federal Reserve finally raising U.S. interest rates, they’re taking a dimmer view of Treasuries as forecasts suggest the securities are headed for losses.

While Europe was roiled by concern a Greek default would splinter the currency union, international investors are nevertheless wading deeper into the riskiest euro nations -- a vote of confidence that suggests its members can avoid a repeat of crises over the years that almost tore the region apart. Tepid growth and the risk of deflation also mean ECB President Mario Draghi may need to step up stimulus in 2016 -- which JPMorgan Chase & Co. says will help Europe outperform the U.S. as monetary policies diverge.

“A lot of these credits that were feared to be disasters like the peripherals from Spain all the way down to Greece, had events for years and there’s going to be political and economic challenges going forward but those have been the best performers,” said Robert Tipp, the chief investment strategist at the fixed-income unit of Prudential, which oversees $947 billion globally.

Tipp said the firm’s global funds are maintaining their “overweight” stance on bonds of peripheral countries in 2016, which means they hold a greater proportion of the securities than their allocation in benchmark indexes.

Charging Ahead

Those nations have led the charge this year. Greek bonds returned 22 percent as the Mediterranean country recovered from a debt showdown with creditors led by Germany and implemented measures to curb government spending. Debt issued by Italy and Portugal also returned more than 3 percent. Higher-rated countries, such as Germany and the U.S., have lagged behind.

Although the greenback’s appreciation this year would have eroded those returns for dollar-based money managers, Tipp says most big global investors hedge away that risk when they invest outside their home country. In fact, quirks in forwards market pricing have meant dollar-based investors have added to their returns when hedging, Tipp said.

Going into 2016, Portugal is a favorite for Scott Thiel, BlackRock’s deputy chief investment officer for fundamental fixed income.