Larry Berman CFA, CMT, CTA VanEck Vectors J.P. Morgan EM Local Currency Bond ETF EMLC-N BUY May 31, 2021

Emerging markets issue bonds in local currencies or in US dollars. This one is local currency bonds. Since the FED has stopped increasing interest rates, then currencies should strengthen rather than weaken. You probably have 10% downside with a yield of 6.25% plus 2-3% on the currency side. He likes this in the fixed income world. It is his favourite play and is a big position in all his portfolios.

It is a basket of emerging market countries including some challenged ones. We are going through a shock period now. They are government bonds trading in the local currencies so you have interest rate risk as well as currency risk. He has been adding to them over the last year and a half. You have to wait until the strength gets back into the emerging currencies. You get paid a good yield and the volatility is way less than emerging market volatility.

A basket of emerging market sovereign debt. You get countries like China, Turkey and Argentina. High quality with weak fiscal situations and you get exposure to foreign currency. Governments are poised to be printing their own money and so they are unlikely to default in their own currency. 6% yield.

A basket of emerging market bonds. If the US dollar strengthens, it will get hurt. It is emerging market sovereign bonds issued in local currency. If in the next couple years, the Fed prints money and monetize debt, the emerging market currencies will strengthen relative to the dollar. The bonds yield north of 6%. There will be some volatility going into the election.