3–5 Years: Although overall EM risk levels have come down in recent years, drawdowns can disrupt returns without sufficient time for losses to be recouped as markets recover. Therefore, time horizons under three years may be too risky for significant allocation to EM. However, investors can reduce the risks in the three-to-five years bracket by focusing on asset classes with lower historic volatility. Hard-currency EM debt also allows investors to sidestep the swings in foreign-exchange markets. The relatively low historical drawdowns in the EM sovereign and corporate debt asset classes make these attractive options for investors with shorter time horizons.