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Post by alvinthechipmunk on Mar 12, 2022 1:52:52 GMT
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Post by steadyeddy on Mar 12, 2022 3:42:55 GMT
I own EMB, the EM $ denominated sovereign debt ETF - took a beating but not planning to sell. It is a part of my broadly diversified bond portion. In fact, I also own EMLC and HYEM in the emerging market space. |
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Post by steadyeddy on Mar 12, 2022 12:07:42 GMT
alvinthechipmunk, considering that the EM countries have better yields (in terms of dollars) I think it is a good idea to have a portion of our bonds in EM. AS you know, they are riskier - more riskier than the HY in the USA in my opinion. Not sure if you own CEFs, but if you do EMD and EDD are two choices for exposure to EM bonds. I own both in very small quantities.
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Post by steelpony10 on Mar 12, 2022 12:25:32 GMT
Another great opportunity right now long term if you’re younger. Blood money for sure.
If you’re a retiree during times like these you have an opportunity to prepare for the next crisis. Basically you give up some dependence on elusive long term equity returns and go for more steady income. This may be the basis for the 100-your age maxim. Equities then become bonus money down the line. Of course you have to accept as fact your previous portfolio balance was a fantasy and you’re not really losing anything until you flee to cash.
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Post by uncleharley on Mar 12, 2022 14:14:23 GMT
These things can fall to zero.
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Post by alvinthechipmunk on Mar 12, 2022 20:02:04 GMT
These things can fall to zero. ? Sorry, what things? |
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Post by steadyeddy on Mar 12, 2022 20:06:18 GMT
These things can fall to zero. , many individual things can fall to zero - but usually not funds. |
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Post by alvinthechipmunk on Mar 12, 2022 20:06:49 GMT
alvinthechipmunk , considering that the EM countries have better yields (in terms of dollars) I think it is a good idea to have a portion of our bonds in EM. AS you know, they are riskier - more riskier than the HY in the USA in my opinion. Not sure if you own CEFs, but if you do EMD and EDD are two choices for exposure to EM bonds. I own both in very small quantities. EMD is using "return of capital." I don't quite understand that. Please edify me? Thanks. (EDD is NOT doing that.) EDD is a LOCAL CURRENCY fund? Confused by the "domestic" in its name. |
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Post by steadyeddy on Mar 12, 2022 20:15:22 GMT
alvinthechipmunk , considering that the EM countries have better yields (in terms of dollars) I think it is a good idea to have a portion of our bonds in EM. AS you know, they are riskier - more riskier than the HY in the USA in my opinion. Not sure if you own CEFs, but if you do EMD and EDD are two choices for exposure to EM bonds. I own both in very small quantities. EMD is using "return of capital." I don't quite understand that. Please edify me? Thanks. (EDD is NOT doing that.) Some CEFs use "managed distributions" meaning they pay a fixed amount each month regardless of how much they earn in that month. In order to maintain that fixed amount, they return a portion of the capital in the form of "return of capital." Over time, many CEFs earn their distribution so ROC fluctuates. I am anticipating EMD to over-earn their distributions over time. Another thing to observe is the discount to NAV - for example EMD NAV is $11.55 but trades at $9.75 for a 15% discount. So we are buying $11.55 worth of assets for $9.75 Make no mistake the CEFs are riskier than US junk bonds but a little spice makes the burger taste good. |
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Post by alvinthechipmunk on Mar 12, 2022 21:50:10 GMT
steadyeddy. glad for the response. Very clear. Thank you. Yes, I must stay aware of my own risk tolerance and decide how much I'd be willing to plunk down. 
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Post by steadyeddy on Mar 13, 2022 23:43:16 GMT
This link from Bloomberg sees upside with EM bonds... I miss that "all aboard" poster from M* - does anyone know where that person is?
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Post by bb2 on Apr 5, 2022 17:10:19 GMT
I'm assuming ya'll buy EM bond funds for diversification/ballast? Must be, considering the poor relative performance over time.
I get why a professional manager would diversify like this - to cut down the phone calls when the US stock market drops.
And maybe for an individual with a financial plan that requires limited volitility - ie, not enough wealth to keep a few years of liquidity on hand. Of course, this means one would need more wealth to sink into EM to provide that ballast.
So, my question is why? Why own EM bonds? Maybe something I'm not getting/understanding.
Also, I'm not a fan of ROC because of the tax surprises.
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Post by xray on Apr 5, 2022 18:02:03 GMT
steadyeddy, Your: Some CEFs use "managed distributions" meaning they pay a fixed amount each month regardless of how much they earn in that month. In order to maintain that fixed amount, they return a portion of the capital in the form of "return of capital." Over time, many CEFs earn their distribution so ROC fluctuates. I am anticipating EMD to over-earn their distributions over time. Another thing to observe is the discount to NAV - for example EMD NAV is $11.55 but trades at $9.75 for a 15% discount. So we are buying $11.55 worth of assets for $9.75. Make no mistake the CEFs are riskier than US junk bonds but a little spice makes the burger taste good. ----------- Very true but we need to stress that following the " NAV" (actual value of the security in question) is everything (IMHO) and never the MktPrc where many investor/traders " PLAY" with the security MktPrc. I never use ROC (or MktPrc) as any of my data points since it is tied to the end of the year (12/31) and can change substantially during the year with both the market changes and CEF performance (changes in portfolio that are not reported immediately but usually in the following Qtr). A manager change of a CEF is a "RED FLAG" to me as the current performance is no longer a reflection of future performance.... In my case, if the NAV is always rising (wk-to-wk) the ROC factor means nothing to me and some others. The discount, as you point out, is something to look at but some CEF's "never" go to a premium. When looking at discounts, one might want to look at the current average discount over the last 52wk period.... One single opinion of the many I am sure.... Live Long and Prosper....
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