Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Investors Dump Local Currency EM Bond Funds This Week: ETF Watch

Published 06/01/2018, 02:26 PM
Updated 06/01/2018, 02:50 PM
© Reuters. Investors Dump Local Currency EM Bond Funds This Week: ETF Watch

(Bloomberg) -- Two exchange-traded funds tracking local currency bonds in emerging-markets absorbed massive block sales this week as global fears of trade disputes and rising U.S. Treasury yields sent developing nation debt into a tailspin.

Investors moved more than $73 million of the SPDR Bloomberg Barclays (LON:BARC) Emerging Markets Local Bond ETF, or EBND, on Thursday. That was the most since November 2012 and more than 14 times the daily average volume in the past year. A larger fund, the VanEck Vectors J.P. Morgan EM Local Currency Bond ETF, or EMLC, posted turnover of $253 million Thursday, more than five times its daily average in the past year.

It’s no surprise that investors are heading for the exits, as local currency emerging-market credit is taking a beating. In May, local sovereign bonds posted a negative 0.75 percent total return and the MSCI Emerging Markets Currency Index fell nearly 1.4 percent.

But despite investor caution, some see the rout as a chance to enter the market. For example, Didier Lambert, a portfolio manager at JPMorgan Chase & Co (NYSE:JPM)., is finding value in countries with low inflation that boosts real yields. He’s betting on nations like Indonesia, Brazil and South Africa. And he’s not alone in his convictions.

“The EM local market is looking more valuable as some investors have exited,” said Michael Roche, a New York-based strategist at Seaport Global Holdings. “Those remaining are more strategic in outlook and less prone to abruptly leave the sector.”

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.