|Bid||107.25 x 800|
|Ask||107.26 x 800|
|Day's Range||107.22 - 107.44|
|52 Week Range||104.98 - 116.86|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.40%|
Emerging markets are in decline, led by currency crises in Turkey and Argentina, but investors are not selling emerging markets funds. Either long-term investors are sticking to their guns or the worst is yet to come.
Will the Global Growth Scare Offer Opportunity in Q3 2018? NATALIA GURUSHINA: VanEck CEO, Jan Van Eck, joins me today to discuss his macroeconomic outlook and also to talk about investment opportunities that he finds most interesting in the current environment. The first question is: You were quite bullish on global growth, on commodities, and emerging markets earlier this year.
This is reflected in the appreciation of the U.S. dollar, when measured by the U.S. Dollar Index (DXY), which is up 4% over the last three months and almost 9% over the last 6 months. NYMEX Copper futures are entering bearish territory after sliding below $3 per pound in mid-June, their lowest level since 2017, an 18% fall over the last 6 months, reflecting the negative outlook on global growth measured by China's weaker-than-expected industrial production and retail sales growth, and exacerbated by negative headlines from trade wars and sanctions. Copper is sensitive to trade tariffs and emerging markets, which are home to major producing hubs.
The Turkish lira plunged 10% on Friday on investors' worries about the country's financial stability The slide came after Turkish President Recep Tayyip Erdogan urged citizens to convert foreign currencies and gold into lira, and accelerated after U.S. President Donald Trump tweeted that he was doubling metals tariffs on Turkey. Emerging market bonds fell on the news.
Could Spike in Volatility Make Emerging Market Growth Stumble? The benefits of an emerging markets aggregate bond exposure may explain the increasing flows into these strategies. According to J.P. Morgan, strategies which blend corporate and sovereign exposure took in approximately $35 billion in 2017, a similar level to sovereign focused emerging markets strategies.
Could Spike in Volatility Make Emerging Market Growth Stumble? Although an all hard currency allocation can mean avoiding local exposure altogether, hard currency sovereign debt has performed similarly to local sovereign bonds year-to-date. Allocating to the entire investable opportunity set means approximately 64% exposure to hard currency and 36% exposure to local currency bonds.
Could Spike in Volatility Make Emerging Market Growth Stumble? The emerging markets sell-off has continued in recent weeks, as the U.S. dollar remains strong amid domestic economic data that supports a case for higher U.S. interest rates. Many emerging markets local currencies have been severely impacted, particularly those of more vulnerable countries and where political risk is rising.
Dollar-denominated emerging market bonds and related exchange traded funds are under increased pressure as the Federal Reserve hikes interest rates, trade tensions escalate and the U.S. dollar strengthens. Year-to-date, the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and Invesco Emerging Markets Sovereign Debt Portfolio (PCY) , which both track USD-denominated emerging market debt, declined 6.5% and 8.2%, respectively.
Investors are yanking money from emerging-market exchange traded funds as rising interest rates in the U.S. weaken emerging-market assets.
Exchange traded funds holding emerging markets debt are getting drubbed this year. For example, the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is lower by 8% while the VanEck Vectors Emerging Markets Local Currency Bond ETF (EMLC) is down almost 10%. EMB tracks the J.P. Morgan EMBI Global Core Index, a market-cap-weighted index.
Crude oil has again taken the headlines this week along with the ongoing political debacle in Italy. The black commodity started to reverse gains after Saudi Arabia and Russia hinted that output could be boosted to avoid a supply shock. Regional banks trended second after U.S. Congress rolled back legislation aimed to prevent a fresh financial crisis. Small-Cap Index Russell 2000 felt like a safe haven amid the market turmoil and was third in the list. Emerging markets equities and emerging markets bonds close the list. Check out our previous trends edition at Trending: Strong Dollar Plunges Argentina Into Crisis, Again
Despite the recent weakness in the developing market segment, investors can still look to emerging market bond ETFs for their attractive payouts. With yields on benchmark 10-year Treasuries hovering around ...
In an environment where the 10-year U.S. Treasury bond yield can't hold 3 percent, the more than 6 percent average yield on emerging market debt is an attractive proposition.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: EMB) and other exchange traded funds holding dollar-denominated emerging markets debt are struggling as familiar problems are weighing on ...
The iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: EMB), the largest exchange-traded fund tracking developing world debt, is down about 5.6 percent this year and it's not hard to explain why. Catalysts that previously lifted emerging markets debt are ebbing. EMB rose 10.3 percent last year even as the Federal Reserve raised interest rates three times.
Many are still bullish on the EM fundamentals despite the recent selloffs. Are dollar-denominated EM bond ETFs better bets than equities right now?
A third consideration that combines the credit exposure with floating rate exposure is business development companies. Business development companies operate under certain sets of rules, some of which have changed recently in their favor.
Real yields are nominal yields adjusted for inflation, which is often one of the greatest contributors to the nominal yield levels of emerging markets local currency bonds. These higher nominal yields provide compensation for the risk posed by local inflation, which can be associated with negative currency returns. Controlled inflation can provide support to local currencies, and when combined with relatively high nominal yields (therefore resulting in positive real yields), fixed income assets may be particularly attractive.
Real yields in emerging markets (or EM) have remained at compelling levels over the past few years even as they continued to decline in developed markets, and even as nominal yield levels declined in some EM countries. Last summer we examined why real yields matter to emerging markets bond investors. Before we dive into the real yields that emerging markets are offering, let’s first make sure we understand what real yield is.