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.
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.
Since the US presidential election, emerging markets have bounced back as though the election never happened.
Strong Local Currency Performance As Rates Remain Steady Returns in the emerging markets debt space have so far in 2016 ranked commensurately with risk. More specifically, local debt has been…
Looking closely at mutual fund and ETF flow data can provide some insight into how investors have approached the asset class this year.
Emerging market bonds have outperformed year-to-date. Let’s take a closer look.
The reason for low yields lies outside the United States. Global yields have been heading south over the last ten years.
Corresponding fund outflows underline investors’ negative sentiment as more than $353 million was pulled out from the Financial Select Sector SPDR Fund (XLF) last week.
Fund flows to XLF have fallen by 7% on fears of a global slowdown, plunging commodity prices, and falling expectations of a rate hike.
In 2016 so far, ETF investors have withdrawn $2.3 billion from the Financial Select Sector SPDR ETF (XLF).
The SPDR S&P Capital Markets ETF (KCE) (XLF) has lost $6.1 million in assets so far in 2016. In comparison, its outflows for 2015 were $45.3 million.
Shares of KIE have been relatively resilient to the global sell-off that has been witnessed since the beginning of the year.
During the month of March, KRE gained $90 million in terms of assets. Last week alone, KRE recorded inflows of $62 million.
ETF investors have added $31.2 million to the SPDR S&P Bank ETF (KBE) so far in March 2016. However, in February, investors pulled $28 million out of KBE.
The iShares US Financials ETF (IYF) recorded net outflows of $847 million in 2015. As of March 24, 2016, investors have withdrawn $360.6 million from IYF.
ETF investors plowed $923 million into the Vanguard Financials ETF (VFH) in 2015. As of March 24, 2016, VFH has witnessed inflows of $195.8 million.
Investors have added funds worth $4.9 million to XLF during the week ended March 24, 2016, and they have withdrawn $85 million during March.
So far in 2016, ETF investors withdrew $1.8 billion from XLF. ETF investors added funds worth $4.9 million to XLF’s portfolio during the week ending March 24.
The PE (price-to-earnings) ratio of XLK is 18.7x, and its PBV (price-to-book value) ratio and distribution yield are 4.1x and 1.8%, respectively.
In 2016, investors have withdrawn $1.7 billion from the Financial Select Sector SPDR Fund (XLF). Investors pulled out funds worth $447 million from XLF during the week ending March 11.