Emerging-market bonds delivered strong returns last year, and we think the sector has more potential. In 2018, though, investors will have to exercise caution.
Afraid you’ve missed the rally in emerging-market (EM) assets? Don’t be. Responsible policies and pragmatic politics have taken hold in many developing countries. That bodes well for growth and suggests the rally has room to run.
Political fireworks from developed economies have been front and center for most investors. But under the radar screen, there’s been a healthy turnaround in emerging markets that’s generating appealing fixed-income opportunities.
The index-tracking trend is firmly entrenched. But do investors recognize the big differences between stock and bond ETFs? And do they appreciate that these can cause European high-yield ETFs to lag?
For investors in search of a way to boost income and diversify their bond portfolios, now may be the time to consider what local-currency emerging-market bonds offer.
With inflationary pressures under control and external balances improving, many emerging-market (EM) countries are working on the next item on their to-do lists: reigning in fiscal deficits. That’s good news for emerging equities, dollar-denominated bonds and local-currency debt.
There’s value and opportunity in European high-yield bonds today. But if you’re considering using an exchange-traded fund (ETF) to tap into the market, you may want to think again.
Higher interest rates, a stronger dollar and Donald Trump: three reasons to avoid emerging-market (EM) debt? Not necessarily. Rising rates seem to be signaling faster growth, and that’s good news for many EM bonds and currencies.
Still think emerging markets are too risky? Think again. Smarter policies are leading to less vulnerable economies and rising currencies. For investors who need to wring more income from their bond portfolios, it’s time for a fresh look.