It’s led to the biggest negative correlation between prices of U.S. bonds and emerging-market stocks, which have slumped 9% since January, in more than three years.

“We’re buying Treasurys mostly due to liquidity concerns,” said McNamara, who’s based in London. “Our holdings are small, but not trivial. It is unusual, but these are unusual times.”

Arevalo of Jupiter has also taken to buying credit-default swaps protecting against defaults on U.S. high-yield bonds. Flows into the American high-yield market and emerging markets are closely correlated, but CDS for the former are more liquid, he said.

Not all emerging-market specialists are convinced it’s time to turn to developed-nation assets. Kevin Daly, a money manager at Aberdeen Standard Investments in London, is instead building up cash and getting ready to purchase the debt of companies or countries whose spreads widen beyond what he thinks is justified.

“Most dedicated EM funds would not be buying U.S. Treasurys,” said Daly, who’s part of a team overseeing $17 billion of developing-nation debt. “What if this bounces back sooner than we think? You’d get a double whammy as you’d lose money on USTs and miss some of the rally in EM bonds.”

This article was provided by Bloomberg News.

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