Opinions
Tyler Mordy
iShares Emerging Markets Local Currency Bond
LEMB-N
TOP PICK
Sep 06, 2018
Stock price when the opinion was issued
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Emerging markets have been underperforming for 5 years, and nobody seems to like them. He likes this one for the interesting credit quality. Looking at the world, which is divided roughly between Western markets and emerging markets, all the good things are happening in the emerging-market. Their currencies have been beaten up over the last 5 years, so they are incredibly cheap. Doesn’t think it will be a huge performer, but it will be a stable part of a globally balanced portfolio.
(A Top Pick July 22/16. Up 0.91%.) If you look at the developed world, and consider that more than $10 trillion worth of sovereign bonds yield negative rates, where is money going to flow? Emerging markets are moving up the credit scale. They don’t have quantitative easing or negative interest rate policies. Yields are good at around 5%.
This has outperformed bond markets in the west. EM bonds are performing better than western government ones due to increasing credit quality, younger demographics and lower debt in EM markets. Sometimes dividends are paid internally through in increase in NAV and not paid in cash, sometimes externally. The former may be the case here. This is a very good place for income.
This one has been beat up. It’s hard to get income around the word. This ETF has an yield of over 8%. He thinks it is good timing. Relative to high yield bond markets in the US, it offers better risk/return metrics.