Time to Rethink the Role of Emerging Market Bonds
Emerging markets have done well this year and should continue to attract investor interest around the globe. Latin America is leading year-to-date.
The Barbell strategy involves putting half your portfolio in defensive, low-beta sectors or assets and the other half in aggressive, high-beta sectors or assets.
Emerging market debt can be a great source of income potential in a diversified portfolio, provided you can manage it during a period of extreme volatility.
You have two options when it comes to investing in emerging market bonds—hard currency bonds and local bonds.
Investors are stepping back into emerging market bonds after removing billions of dollars from emerging markets in 2016.
Strong investor interest in emerging market debt has continued despite adverse political and economic issues in some countries.
According to a recent BofA Merrill Lynch Global Investment strategy report, emerging markets are expected to grow at a modest pace of 4.7% in 2017.
Negative bond yields in Japan and low Fed funds rates in the United States and the Eurozone were one reason emerging market bonds performed well in 2016.
Since the US presidential election, emerging markets have bounced back as though the election never happened.
Many investors look to the stock performance in January to predict results for the whole year.
Opportunistic tax-loss selling, $46 billion in maturities and coupon payments, and constrained supplies in municipal bonds all point to one thing: the January Effect may be a “slam dunk.”
Treasuries recorded a spike in their yields last year due to the sell-off after Donald Trump’s victory.
The January Effect is a rise in asset prices often (but not always) observed throughout the month of January. There are a number of theories as to why this happens.
Another factor that impacts small-cap stocks’ performance is the yield curve. The yield curve has remained on the flatter side since the recession.
Small caps strengthened throughout the year due to expectations of fewer rate hikes in 2016 by the Fed. The markets expected more rate hikes.
The Restaurant ETF (BITE) is the only ETF that invests exclusively in restaurant stocks. The top ten holdings of BITE currently make up ~30.0% of the ETF.
Investors looking for opportunities in fallen angel bonds can look at the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL).
Hungary’s credit upgrades to “investment-grade” (FLTR) opened doors for investors tracking low-risk benchmarks.
Although Hungary and Turkey credit spreads were at similar levels and generally moved together through 2014, these spreads began to diverge in early 2015.
The Turkish lira plunged to record lows against the dollar following its downgrade by Moody’s and S&P, who cited increased political instability as well as geopolitical stresses and turbulence.