Some Institutional Investors Have Looked to Add Emerging Markets Debt Exposure While Retail Investors Have Reduced, Says Market Vectors' Fran Rodilosso
NEW YORK--(BUSINESS WIRE)--
Some institutional investors are starting to wade back into emerging
market debt. At the same time, retail investors appear to have reduced
their allocations over the past 12 months, and still seem to be
generally avoiding the asset class, according to Fran
Rodilosso, fixed income portfolio manager for Market Vectors ETFs.
"Poor relative performance last spring and summer as interest rate
volatility increased, and the headline risks around the Chinese economy,
the Russia/Ukraine situation, Venezuela, Turkey, and a host of other
situations are likely, in my opinion, to have caused many retail
investors to approach emerging market debt with renewed caution," said
Rodilosso. "While no one can predict with certainty when the market will
turn, I believe the time may be right for investors with a longer-term
view to consider taking a fresh look at this asset class."
Rodilosso noted that there is evidence that some institutional asset
managers, including asset allocation strategists, pension funds, and
foreign fund managers, are now increasing exposure to emerging markets
in various ways. "These asset allocators may be looking for alternatives
to the U.S. dollar, access to non-repressed yield curves, and at this
point in the credit cycle, ways to increase the diversification of their
credit portfolios," the Market Vectors portfolio manager said.
"Remember that the investable debt universe in EM is largely investment
grade," Rodilosso added. "And many of the troubled markets have suffered
in price terms. However, at the end of the day, it's up to the investors
and their advisors to judge if they are compensated for the risks they
Mr. Rodilosso has over 20 years of experience trading and managing risk
in fixed income investment strategies, including more than 17 years
covering emerging markets. Among the Market Vectors ETFs under his watch
Grade Floating Rate ETF (NYSE Arca: FLTR®), Treasury-Hedged
High Yield Bond ETF (NYSE Arca: THHYTM),
Markets Aggregate Bond ETF (NYSE Arca:EMAGTM),
Markets High Yield Bond ETF (NYSE Arca: HYEM®),Emerging
Markets Local Currency Bond ETF (NYSE Arca: EMLC®),Fallen
Angel High Yield Bond ETF (NYSE Arca: ANGL®), International
High Yield Bond ETF (NYSE Arca: IHY®), and Renminbi
Bond ETF (NYSE Arca: CHLC®). As of
March 31, 2014, the total assets for these ETFs amounted to
approximately $1.4 billion.
Please note that the information herein represents the opinion of the
portfolio manager and these opinions may change at any time and from
time to time. Not intended to be a forecast of future events, a
guarantee of future results or investment advice. Current market
conditions may not continue. Information contained herein has been
obtained from sources believed to be reliable, but not guaranteed. ©2014
Van Eck Global.
About Market Vectors ETFs
Market Vectors exchange-traded products have been offered since 2006 and
span many asset classes, including equities, fixed income (municipal and
international bonds) and currency markets. The Market Vectors family
totaled $23.4 billion in assets under management, as of March 31, 2014,
making it one of the largest ETF families in the U.S. and worldwide.
Market Vectors ETFs are sponsored by Van Eck Global. Founded in 1955,
Van Eck Global was among the first U.S. money managers helping investors
achieve greater diversification through global investing. Today, the
firm continues this tradition by offering innovative, actively managed
investment choices in hard assets, emerging markets, precious metals
including gold, and other alternative asset classes.
There are risks involved with investing in ETFs, including possible loss
of money. Shares are not actively managed and are subject to risks
similar to those of stocks, including those regarding short selling and
margin maintenance requirements. Ordinary brokerage commissions apply.
Debt securities carry interest rate and credit risk. Interest rate risk
refers to the risk that bond prices generally fall as interest rates
rise and vice versa. Credit risk is the risk of loss on an investment
due to the deterioration of an issuer's financial health. The Funds'
underlying securities may be subject to call risk, which may result in
the Funds having to reinvest the proceeds at lower interest rates,
resulting in a decline in the Funds' income.
The Funds may be subject to credit risk, interest rate risk and a
greater risk of loss of income and principal than those holding higher
rated securities. As the Funds may invest in securities denominated in
foreign currencies and some of the income received by the Funds may be
in foreign currency, changes in currency exchange rates may negatively
impact the Funds' returns. Investments in emerging markets securities
are subject to elevated risks which include, among others,
expropriation, confiscatory taxation, issues with repatriation of
investment income, limitations of foreign ownership, political
instability, armed conflict, and social instability. The Funds may loan
their securities, which may subject them to additional credit and
counterparty risk. The Funds may be subject to risks associated with
investing in high-yield securities; which include a greater risk of loss
of income and principal than funds holding higher-rated securities, as
well as concentration risk; credit risk; hedging risk; interest rate
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degree of volatility and the potential of significant loss. For a more
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Diversification does not assure a profit nor does it protect against a
Investing involves substantial risk and high volatility, including
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prospectus, which contain this and other information, call 888.MKT.VCTR
or visit marketvectorsetfs.com. Please read the prospectus
prospectuscarefully before investing.
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Source: Market Vectors ETFs