Not exact matches
The rise in U.S. bond
yields has dented
emerging market currencies and bond
markets, including those in Asia.
Higher U.S.
yields can put pressure on the
currencies of
emerging market countries that run current account deficits such as Indonesia and India, said Satoshi Okagawa, senior global
markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
It puts 25 % into foreign stocks, 25 % into U.S. Treasuries, and 10 % each into commodities,
emerging -
market currency, bank loans, high -
yield bonds, and 5 % each into TIPS and local -
currency emerging -
market debt.
Then «tapering» talk by the Federal Reserve caused U.S. bond
yields to shoot up and draw back the capital that had earlier flowed into the
emerging markets, putting more downward pressure on financial
markets and
currencies.
Against this environment, our strategists remain bullish on equities and continue to favor
emerging market currencies and, in the fixed income space, prefer local
markets over external debt and maintain their higher -
yielding yet better - quality bias.
The era of cheap or zero - interest money that led to a wall of liquidity chasing high
yields and assets — equities, bonds,
currencies, and commodities — in
emerging markets is drawing to a close.
Our Global
Market Strategies segment, established in 1999 with our first high
yield fund, advises a group of 46 active funds that pursue investment opportunities across various types of credit, equities and alternative instruments, including bank loans, high
yield debt, structured credit products, distressed debt, corporate mezzanine, energy mezzanine opportunities and long / short high - grade and high -
yield credit instruments,
emerging markets equities, and (with regards to certain macroeconomic strategies)
currencies, commodities and interest rate products and their derivatives.
«
Yield spreads over developed
market bonds are reasonable, and the opportunities for adding value are more extensive, although
emerging market currencies may need to weaken further in the short term.»
The fund holds a minimum of 25 % allocation to mortgage - backed securities, a maximum of 20 % in high
yield corporate bonds, up to 15 % allocation to bonds denominated in foreign
currencies, and a 20 % cap to
emerging markets.
Other investors may want to consider the iShares
Emerging Markets Local
Currency Bond ETF (LEMB), iShares
Emerging Markets Corporate Bond ETF (CEMB), or iShares
Emerging Markets High
Yield Bond ETF (EMHY).
For that reason, many looking at carry trading strategies will have to go out over the risk curve and borrow in a cheap major
currency in order to buy a higher -
yielding emerging market (EM)
currency in order to earn a
yield beyond that of higher - duration US Treasury bonds (considered safe
yield).
There is no exposure to
currency risk, high
yield bonds or
emerging market debt.
Emerging market sovereign bonds that are issued in local
currencies are supported by high real
yields and improving credit quality.
Of course, these expected
currency gains are small compared to the real
yield on
emerging market bonds.
Total Return from
currency appreciation, implied
yields of
Emerging Markets currencies, and income generated from U.S. money
market collateral securities
Class A shares with sales charges performance reflects the maximum 5.5 % sales charge, with the following exceptions: Class A shares of Hartford
Emerging Markets Local Debt, Hartford High
Yield, Hartford Inflation Plus, Hartford Municipal Opportunities, Hartford Municipal Real Return, Hartford Strategic Income, Hartford Total Return Bond, Hartford World Bond, Hartford Schroders
Emerging Markets Debt and
Currency, Hartford Schroders Tax - Aware Bond, Hartford Schroders
Emerging Markets Multi-Sector Bond and Hartford Schroders Global Strategic Bond reflect a maximum 4.5 % sales charge; Class A shares of Hartford Floating Rate and Hartford Floating Rate High Income reflect a maximum 3.0 % sales charge; Class A shares of Hartford Short Duration reflect a maximum 2.0 % sales charge.
Some of those risks include general economic risk, geopolitical risk, commodity - price volatility, counterparty and settlement risk,
currency risk, derivatives risk,
emerging markets risk, foreign securities risk, high -
yield bond exposure, noninvestment - grade bond exposure commonly known as «junk bonds,» index investing risk, industry concentration risk, leveraging risk,
market risk, prepayment risk, liquidity risk, real estate investment risk, sector risk, short sales risk, temporary defensive positions, and large cash positions.
You can make profits by borrowing in low -
yielding currencies like the dollar and euro and investing in high -
yielding debt in
emerging markets.
The iShares J.P. Morgan EM Local
Currency Bond ETF provides exposure to bond issues across several
emerging markets — a riskier proposition on its face than investing in developed countries with better credit ratings, which helps explain the high
yield.
IMPORTANT NOTE: We are intentionally adding foreign
currency risk here; do not consider a high -
yield (low credit grade), a dollar - hedged foreign, or an
emerging markets bond fund if BWX isn't available to you.