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Just curious if investors on this board feel as though Emerging Markets Bonds are worthy of consideration for a portfolio. If so, what are some of your choices for mutual funds?
Surely. Particularly with domestic bonds still not far above ZIRP territory. I sold my DLFNX. It had stalled, by my observation, for too long. I split the proceeds between PREMX (EM bonds) and PRSNX (Global bonds, multi-asset.) FNMIX might be a hair better than PREMX over the long haul. But I'm just about married to TRP. I bought PREMX at $13.26 and I wonder if we will ever see that again. Anyhow, that was in July of 2010. Since then, the monthly dividends have been delicious and reliable, like clockwork. At the beginning, it was .07 cents/month. It's still over .06 cents/month. It's a risky category, but the fund manager has proven to be savvy. PREMX is 14% of portfolio. PRSNX is 10.76%. I still hold a bunch of domestic bonds in MAPOX and PRWCX, both "balanced" funds.
Thanks for the reply, Crash. I did notice that FNMIX is a bit more volatile in this category. PRSNX doesn't appear to be a straight EM bond fund although it does hold some EM in its portfolio. Hard to figure out what % is EM in this fund. PREMX does appear to be a good fund, for sure. I also noticed that there are some low duration EM bond funds now, such as DELNX. Any opinion on them? Thank you.
Permit me just an initial reaction, without really looking further. DoubleLine has been around only since, when? ... 2009? They already have a fair-to-middling EM Bond fund, run by Luz Padilla. (DLENX, 5 years +5.09%, 39th percentile.) Compare PREMX +6.01/12th percentile. FNMIX +6.3 and 7th percentile. I think a short-term EM bond fund is not a thing that would interest me. In DLENX, you already have 108% turnover. PREMX = 60%. FNMIX =82%. And with a low-duration EM bond fund (DELNX), what ARE you investing in, then, when the "standard" DoubleLine EM bond fund already carries 108% turnover. How long is anything being held in DELNX? A week? Morningstar shows 60% turnover, but this is within a professed short-duration universe. So, my reaction is negative just based on common sense. Others will surely disagree. ... Yes, PRSNX is NOT a purely dedicated EM bond fund. Latest numbers at Morningstar show 41.64% of holdings are USA. The rest is REALLY spread-out, starting with Serbia, and ending with Japan, among the top 10 countries. India, Mexico, Malaysia and Brazil are surely EM, besides Serbia.
EM bonds are especially appealing with higher-grade domestic stuff just not paying much. PRSNX pays me only about .03 cents/month, but it's something of a counterweight to my all-in bet with PREMX. They're not designed to be quite the same thing, so they don't DO quite the same thing. ... Compare the disgustingly low rates of return on Savings Bonds. I looked at Canada sav. bonds, too. It's pathetic. Canada now offers TAX-FREE savings accounts. The returns are less than 1%. So a global or foreign or EM bond fund makes sense. Otherwise, you're treading water. No way to invest... Just don't go whole-hog. By the way, David Snowball featured PRSNX as a "Morningstar orphan" recently: http://www.mutualfundobserver.com/2017/02/t-rowe-price-global-multi-sector-bond-prsnx/
We use TGBAX as a core hold in many accounts, with GSDIX for some larger accounts. Although TGBAX is not EM per se, Hasenstab uses a lot of EM currencies and has not been afraid of owning EM bonds (currently about 60%). It is clearly the "chicken" way to own some EM bonds. We have used FNMIX some in the past, and really like the manager. Should we be in a prolonged dollar slide, a local-currency fund like GIMDX could be advantageous (and it has done well YTD), and we have used it in the past under those circumstances. Unfortunately, M* lumps dollar and local funds together, skewing the dollar-based funds much higher because of the dollar's recent strength. I do not see much attraction for DELNX. The very low yield does not compensate me for the EM risk.
@MFO Members: You know the sign at the zoo, DON'T Feed THE BEARS, well with all due respect, willmatt72 is bound and determined to own a fund or funds in every fund category. He promised to reduce the numbers of funds he has accumulated, but his query about Emerging Bond Funds is cause for worry. No willmatt72 you don't need to buy an Emerging Markets Bond fund ! Regards, Ted
Ted, you have expressed your opinion about my portfolio on a number of occasions. Duly noted repeatedly. With all due respect, you have no clue about my specific holdings or financial situation. My question is by no means "cause for worry," and no, I do not intend on owning a fund in every category. My portfolio is my business and what I do with my money is my business. Thanks for your opinion about emerging markets bond funds.
@willmatt72 We don't know your desire for inclusion of EM bonds in your portfolio and apparently Ted knows about your current holdings........I do not.
Not unlike other investment areas, EM bonds have their days in the SUN and days in the SHADE, eh? Relative to the below charting link, which is total returns, therefore includes reinvestment in a given fund of all distributions for the time period.
The OMG with a frown side: If one purchased any of these funds in Jan., 2014 and checked the return through, Jan., 2015 would = a frown of flat return. The same frown with a Jan., 2015 through Jan., 2016 holding period.
The OMG with a yipee side: A purchase in Jan., 2016 or Nov., 2016 through June 13, 2017. Although the November election would have given pause to those who had purchased in Jan., 2016.
The below chart is referenced to some of the mentioned funds in this thread: PREMX , FNMIX , GSDIX , DLENX with a time frame of Janury, 2014 through June 13, 2017.
For those who use some technical views, the current 14 day RSI (relative strength index) is at 70 for all funds, EXCEPT DLENX , which is at 87. Any reading above 70 is considered moving into or at an "over or fully priced" area. NOTE: an above 70 indicator can persist for any given term, dependent upon the nature of the investment sector.
We held FNMIX for about a 2 year period, 2010-2012. We're fully invested in other sectors, and would not have EM bonds on our purchase list at this time. I recall that FNMIX was down only 18% during the market melt period for the 2008 year. But, that was then; and is history, relative to what would happen today.
@willmatt72 We don't know your desire for inclusion of EM bonds in your portfolio and apparently Ted knows about your current holdings........I do not.
Catch
Hello Catch,
I do not share the details of my entire portfolio with anyone, just bits and pieces here and there. Anyone who thinks they know those details is being presumptuous at best. Thanks for the input and chart.
EM debt's had a good run, and the yields and spread don't really inspire a lot of optimism for the near future. I'd be at least a little cautious jumping in with new $ right now.
Just fyi, those who own PIMIX/PONDX already have ~ 15% in EM, overweighted in Latin America.
When I've had $ in pure EM vehicles, it's been in DLENX and/or PCY. PDIIX at Pimco is more diversified, but usually has a decent slug of EM in among global and high-yield FI; its benchmarks are US$-hedged.
One other caution it's probably worth being aware of: it's pretty typical for pure EM debt funds to be overweight oil and gas, which in the EM world are typically referred to as "quasi-sovereign" because many are national corporations. If you don't want a lot of commodity/cyclical exposure, I'd take a good look at holdings.
After 3 consecutive losing years emerging markets bonds came back to life last year and in 2017 lead the pack in Bondville. With a deteriorating dollar and improving emerging markets economies I see no reason why that should change. Historically they have been a great investment beating the S&P over the past 15 years. They also performed well in the 90s. I have tried at times with this sector but always found it was too volatile for my style of concentration. Also many here hold PONDX/PIMIX and that fund has a large position in emerging markets bonds and is less volatile than a pure emerging markets bond fund.
@Junkster: "many here hold PONDX/PIMIX and that fund has a large position in emerging markets bonds and is less volatile than a pure emerging markets bond fund." If own Pimco Income Fund in one form or another, you don't need an Emerging Markets Bond Fund, it contains as Junkster indicates EM Bonds and has outperformed EM Bond Funds with less volatility , and has a higher yield. Regards, Ted
For many years, I've owned PONDX as well as TGINX. The latter is the fund/firm where Luz Padilla established her track record before migrating to Double Line. TGINX throws off a nice divi, and provides a nice return albeit a bit lumpy which appears to be somewhat common. There is indeed a place for an EM bond...for its own performance or as an EM stock proxy as many would suggest. I am a firm believer in spreading my bets, particularly in the bond space.
@PRESSmUP "If you'd be so kind to guarantee the one which would do the best over the next year or so, I'd look at that one.": I liked your response, you took in in the spirit that it was intended, having some fun ! Regards, Ted
@BobC This is a side question. I hold TPINX. I've checked both Fidelity and Scottrade websites, and as I expected TGBAX is only available through an advisor or other special cases. I am not a Schwab customer, so I am not as familiar with their website. I see nothing on their TGBAX page that indicates these types of restrictions. Could this be a case of poor eyesight on my part, or could Schwab have it available to the great unwashed like me? If answering this is an ethical concern for you, I will understand.
Maurice, TGBAX is available through Schwab's Institutional Services, meaning it is only available to clients of RIAs. No ethical problem at all. There are any number of funds like this. This is different than "Institutional Share Class" funds, which are often available to anyone, but usually have prohibitive minimum purchase amounts (except for RIAs). I hope this is not too confusing. For our clients, there is a transaction charge of $20 to purchase or sell TGBAX. We can justify this by the average size of trades we place in TGBAX and the resulting annual lower expenses.
@Ted man, you really gotta stop hounding willmatt72. It's HIS life.
My sentiment exactly. Unfortunately, Ted thinks that my investment choices must meet his approval, for some reason. I don't agree with some choices made by other investors on this board, but it's THEIR money and life.
We use TGBAX as a core hold in many accounts, with GSDIX for some larger accounts. Although TGBAX is not EM per se, Hasenstab uses a lot of EM currencies and has not been afraid of owning EM bonds (currently about 60%). It is clearly the "chicken" way to own some EM bonds. We have used FNMIX some in the past, and really like the manager. Should we be in a prolonged dollar slide, a local-currency fund like GIMDX could be advantageous (and it has done well YTD), and we have used it in the past under those circumstances. Unfortunately, M* lumps dollar and local funds together, skewing the dollar-based funds much higher because of the dollar's recent strength. I do not see much attraction for DELNX. The very low yield does not compensate me for the EM risk.
What do you think of a fund like PFSIX? I have been considering an EM bond fund also, but am hoping for a fund that is a combination of both dollar hedged and local currency (hopefully the holdings would be strategic based on how the managers see the currencies moving in the different countries it is invested in). PFSIX is currently divided between the underlying 3 individual funds (50% local currency bond, 26.5% dollar hedged bond, and 22% corporate bond, which I believe can be both dollar hedged and local currency depending on the managers views). Rather than having to choose one or the other, do you or anybody know of any other EM bond funds that invest in both dollar hedged and local currency?
We use TGBAX as a core hold in many accounts, with GSDIX for some larger accounts. Although TGBAX is not EM per se, Hasenstab uses a lot of EM currencies and has not been afraid of owning EM bonds (currently about 60%). It is clearly the "chicken" way to own some EM bonds. We have used FNMIX some in the past, and really like the manager. Should we be in a prolonged dollar slide, a local-currency fund like GIMDX could be advantageous (and it has done well YTD), and we have used it in the past under those circumstances. Unfortunately, M* lumps dollar and local funds together, skewing the dollar-based funds much higher because of the dollar's recent strength. I do not see much attraction for DELNX. The very low yield does not compensate me for the EM risk.
What do you think of a fund like PFSIX? I have been considering an EM bond fund also, but am hoping for a fund that is a combination of both dollar hedged and local currency (hopefully the holdings would be strategic based on how the managers see the currencies moving in the different countries it is invested in). PFSIX is currently divided between the underlying 3 individual funds (50% local currency bond, 26.5% dollar hedged bond, and 22% corporate bond, which I believe can be both dollar hedged and local currency depending on the managers views). Rather than having to choose one or the other, do you or anybody know of any other EM bond funds that invest in both dollar hedged and local currency?
My quick observation is that the three strategies may end up cancelling each other out. Then, as I look at the fund's three-year number of -0.45%, perhaps that is exactly what has happened? Perhaps not, but in the face of a strong dollar, this three-pronged strategy faces a lot of headwinds.
We use TGBAX as a core hold in many accounts, with GSDIX for some larger accounts. Although TGBAX is not EM per se, Hasenstab uses a lot of EM currencies and has not been afraid of owning EM bonds (currently about 60%). It is clearly the "chicken" way to own some EM bonds. We have used FNMIX some in the past, and really like the manager. Should we be in a prolonged dollar slide, a local-currency fund like GIMDX could be advantageous (and it has done well YTD), and we have used it in the past under those circumstances. Unfortunately, M* lumps dollar and local funds together, skewing the dollar-based funds much higher because of the dollar's recent strength. I do not see much attraction for DELNX. The very low yield does not compensate me for the EM risk.
Bob, I just checked a fund at M* and it falls under the "Emerging Markets Local Currency Bond" category. So they must have started to separate the two?
We use TGBAX as a core hold in many accounts, with GSDIX for some larger accounts. Although TGBAX is not EM per se, Hasenstab uses a lot of EM currencies and has not been afraid of owning EM bonds (currently about 60%). It is clearly the "chicken" way to own some EM bonds. We have used FNMIX some in the past, and really like the manager. Should we be in a prolonged dollar slide, a local-currency fund like GIMDX could be advantageous (and it has done well YTD), and we have used it in the past under those circumstances. Unfortunately, M* lumps dollar and local funds together, skewing the dollar-based funds much higher because of the dollar's recent strength. I do not see much attraction for DELNX. The very low yield does not compensate me for the EM risk.
Bob, I just checked a fund at M* and it falls under the "Emerging Markets Local Currency Bond" category. So they must have started to separate the two?
Yes, this just occurred. Other local-currency options would be TGWNX and OEMYX. As an aside, local currency funds tend to have horrible downside capture numbers and also very high Betas. So for me to put money there, I would need to be convinced the dollar was in for a long slide.
We use TGBAX as a core hold in many accounts, with GSDIX for some larger accounts. Although TGBAX is not EM per se, Hasenstab uses a lot of EM currencies and has not been afraid of owning EM bonds (currently about 60%). It is clearly the "chicken" way to own some EM bonds. We have used FNMIX some in the past, and really like the manager. Should we be in a prolonged dollar slide, a local-currency fund like GIMDX could be advantageous (and it has done well YTD), and we have used it in the past under those circumstances. Unfortunately, M* lumps dollar and local funds together, skewing the dollar-based funds much higher because of the dollar's recent strength. I do not see much attraction for DELNX. The very low yield does not compensate me for the EM risk.
What do you think of a fund like PFSIX? I have been considering an EM bond fund also, but am hoping for a fund that is a combination of both dollar hedged and local currency (hopefully the holdings would be strategic based on how the managers see the currencies moving in the different countries it is invested in). PFSIX is currently divided between the underlying 3 individual funds (50% local currency bond, 26.5% dollar hedged bond, and 22% corporate bond, which I believe can be both dollar hedged and local currency depending on the managers views). Rather than having to choose one or the other, do you or anybody know of any other EM bond funds that invest in both dollar hedged and local currency?
My quick observation is that the three strategies may end up cancelling each other out. Then, as I look at the fund's three-year number of -0.45%, perhaps that is exactly what has happened? Perhaps not, but in the face of a strong dollar, this three-pronged strategy faces a lot of headwinds.
Thanks Bob. Pimco recently had a video that they saw better opportunity in local currency right now, but I might play it safe and go with dollar hedged. I'm thinking about possibly going with FNMIX.
@Chinfist: you did not ask me, but you could not do any better than FNMIX. I've been in EM bonds since 2010. I missed the party in '09, when EM bonds zoomed upward in value as the world's "leaders" implemented steps to ameliorate the effects of the Financial Crash which they were responsible for, by not leading.
Comments
EM bonds are especially appealing with higher-grade domestic stuff just not paying much. PRSNX pays me only about .03 cents/month, but it's something of a counterweight to my all-in bet with PREMX. They're not designed to be quite the same thing, so they don't DO quite the same thing. ... Compare the disgustingly low rates of return on Savings Bonds. I looked at Canada sav. bonds, too. It's pathetic. Canada now offers TAX-FREE savings accounts. The returns are less than 1%. So a global or foreign or EM bond fund makes sense. Otherwise, you're treading water. No way to invest... Just don't go whole-hog. By the way, David Snowball featured PRSNX as a "Morningstar orphan" recently:
http://www.mutualfundobserver.com/2017/02/t-rowe-price-global-multi-sector-bond-prsnx/
Regards,
Ted
Not unlike other investment areas, EM bonds have their days in the SUN and days in the SHADE, eh?
Relative to the below charting link, which is total returns, therefore includes reinvestment in a given fund of all distributions for the time period.
The OMG with a frown side: If one purchased any of these funds in Jan., 2014 and checked the return through, Jan., 2015 would = a frown of flat return. The same frown with a Jan., 2015 through Jan., 2016 holding period.
The OMG with a yipee side: A purchase in Jan., 2016 or Nov., 2016 through June 13, 2017. Although the November election would have given pause to those who had purchased in Jan., 2016.
The below chart is referenced to some of the mentioned funds in this thread: PREMX , FNMIX , GSDIX , DLENX with a time frame of Janury, 2014 through June 13, 2017.
http://stockcharts.com/freecharts/perf.php?FNMIX,PREMX,GSDIX,DLENX&n=863&O=011000
For those who use some technical views, the current 14 day RSI (relative strength index) is at 70 for all funds, EXCEPT DLENX , which is at 87. Any reading above 70 is considered moving into or at an "over or fully priced" area. NOTE: an above 70 indicator can persist for any given term, dependent upon the nature of the investment sector.
We held FNMIX for about a 2 year period, 2010-2012. We're fully invested in other sectors, and would not have EM bonds on our purchase list at this time. I recall that FNMIX was down only 18% during the market melt period for the 2008 year. But, that was then; and is history, relative to what would happen today.
Back to work I must be.....
Catch
Regards,
Ted
I do not share the details of my entire portfolio with anyone, just bits and pieces here and there. Anyone who thinks they know those details is being presumptuous at best. Thanks for the input and chart.
Just fyi, those who own PIMIX/PONDX already have ~ 15% in EM, overweighted in Latin America.
When I've had $ in pure EM vehicles, it's been in DLENX and/or PCY. PDIIX at Pimco is more diversified, but usually has a decent slug of EM in among global and high-yield FI; its benchmarks are US$-hedged.
One other caution it's probably worth being aware of: it's pretty typical for pure EM debt funds to be overweight oil and gas, which in the EM world are typically referred to as "quasi-sovereign" because many are national corporations. If you don't want a lot of commodity/cyclical exposure, I'd take a good look at holdings.
Regards,
Ted
Regards,
Ted
Emerging-Markets Local-Currency Bond 1.79 10.10 6.05 9.78 -2.73 -0.01
Emerging Markets Bond 0.73 6.80 3.87 9.99 2.77 4.12
Preferred Stock 0.81 6.22 3.69 8.69 5.92 7.59
Long-Term Bond 2.15 5.42 6.18 0.66 5.59 4.93
Long Government 2.50 5.11 7.10 -5.13 5.59 2.17
World Bond 1.31 4.60 3.68 2.77 0.44 1.92
High Yield Bond 0.74 4.32 2.96 11.34 3.21 6.11
Multisector Bond 0.76 3.87 2.71 6.75 2.71 4.39
Corporate Bond 1.00 3.55 3.59 3.69 3.36 4.02
Nontraditional Bond 0.44 2.72 1.61 5.92 1.93 2.78
Intermediate-Term Bond 0.75 2.65 2.81 1.68 2.44 2.55
Bank Loan 0.22 1.73 0.68 6.47 2.74 4.05
Intermediate Government 0.48 1.45 2.13 -0.44 1.58 1.09
Short-Term Bond 0.18 1.22 1.01 1.53 1.15 1.36
Inflation-Protected Bond 0.29 1.19 1.35 1.25 0.49 -0.12
Ultrashort Bond 0.10 0.69 0.39 1.43 0.79 0.89
Short Government 0.10 0.55 0.66 -0.09 0.57 0.39
Municipal Bond Funds
High Yield Muni 1.22 4.85 3.48 0.97 4.86 4.60
Muni California Long 1.39 4.15 3.66 -0.04 4.18 4.07
Muni California Intermediate 1.16 3.72 3.18 -0.10 2.96 2.91
Muni New York Long 1.23 3.68 3.30 0.51 3.75 3.16
Muni National Long 1.21 3.62 3.29 -0.10 3.57 3.33
Muni National Interm 1.06 3.41 3.04 0.26 2.79 2.66
Muni Pennsylvania 1.11 3.36 2.98 0.41 3.48 2.98
Muni New York Intermediate 1.08 3.32 2.97 0.02 2.96 2.61
Muni Massachusetts 1.11 3.19 2.94 -0.04 2.99 2.48
Muni New Jersey 1.17 3.10 2.83 -0.06 3.06 2.68
Muni Minnesota 1.12 3.09 2.99 0.12 2.95 2.72
Muni Ohio 1.06 2.98 2.76 -0.01 2.98 2.63
Muni Single State Interm 0.99 2.87 2.79 -0.07 2.50 2.21
Muni Single State Long 1.03 2.76 2.53 0.12 3.06 2.51
Muni Single State Short 0.53 1.95 1.37 0.27 1.25 1.20
Muni National Short 0.34 1.66 1.10 0.52 0.90 0.97
Regards,
Ted
Regards,
Ted