The majority of emerging-market currencies are fundamentally undervalued from a long-run perspective, a portfolio manager at Pacific Investment Management Co. said Monday in a note discussing the investment firm's outlook.

Pimco portfolio manager Lupin Rahman pointed out that Asian countries are generally moving to allow faster nominal appreciation of their currencies as they face inflationary pressures. "We expect this trend to continue and be facilitated by China's depegging from the dollar," she said.

Bonds denominated in the local currencies of emerging-market countries are especially attractive, Rahman said, while adding that the dollar-denominated debt of emerging-market sovereigns and corporates may also offer opportunities.

Pimco sees emerging markets outperforming advanced economies over the next three to five years, with growth averaging 6% in the developing world, compared with 2% for advanced economies.

In Latin America and emerging Asia, the firm forecasts growth in the 6% to 7% range in that period, coupled with a soft landing in China. Countries in emerging Europe are likely to experience a period of modest growth in the 4% range, the firm forecasts.

-By Anjali Cordeiro; Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com