Time to Rethink the Role of Emerging Market Bonds
You have two options when it comes to investing in emerging market bonds—hard currency bonds and local bonds.
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.
Since the US presidential election, emerging markets have bounced back as though the election never happened.
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.
In recent years, emerging market (EMLC) (HYEM) ratings have improved considerably due to the strengthening macroeconomic framework as well as years of reforms.
Strong investor interest in emerging market debt (EMLC) (HYEM) has continued despite adverse political and economic issues in some countries.
Emerging market (or EM) debt (EMLC)(HYEM) has, over the last several years, struggled as an asset class.
Some say investors should step step away from domestic markets to benefit from international diversification. The world has changed, and global financial markets are more interconnected.
In this series, we’ll look at the prevalence of home bias, the disadvantages of favoring home bias, and the benefits of international diversification.
A pure cash portfolio means negative returns over the long term as inflation erodes the purchasing power of your reserves.
The allure of cash is indeed strong for most investors. There is no denying the fact that cash is indeed important for a portfolio.
Most of the voting members of the present FOMC are doves who tend to err on the side of caution when making policy decisions.
The dreaded September effect is not limited to US stocks (SPY). It’s relevant to markets around the globe (ACWI).
September has the dubious honor of being the one month that stands out in terms of negative equity returns.
Diversification is important because a diversified portfolio has higher risk-adjusted returns than a portfolio exposed to only one security.
If you’re prone to home-country bias, consider diversifying. Adding emerging markets to your portfolio could improve your risk-adjusted returns.
Mitigate mistakes made due to behavioral biases by thinking long-term and using ETFs as a tool to diversify your portfolio.