From The Reformed Broker:
A few years back, the asset management industry began to get really interested in broadening out their emerging markets (or BRIC) exposure on the equity side with emerging markets debt. They did so primarily with emerging markets sovereign debt - bonds from the countries themselves. And it was good.
Obviously, because of currency issues in 2011, the locally-denominated stuff (like $ELD, also from WisdomTree) did not do as well as the dollar-denominated stuff... but there are a bunch of different funds to play the emerging markets sovereign space with now, and the category has been accepted by the industry. Emerging markets debt as an asset class sports higher yields than developed debt (Europe, Japan)... but with much better underlying fundamentals (lower debt-to-GDP, mineral wealth in-country, younger populations, lower consumer debt, higher savings rates, etc.) in many cases.
And now that the acceptance is mainstream, there is a brand new asset class nudging its way into professionally-managed portfolios that I'm just now starting to consider myself. We're talking emerging markets corporate debt - bonds from highly-rated issuing companies in the emerging markets regions as opposed to the countries themselves.
The logic makes sense...
Read full article...
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