Emerging Markets: Stocks or Bonds?

[steadyeddy]

Take a look at this chart comparing total return of EEM (stock) and EMB  ($ denominated bonds) of Emerging Markets over the last 13 years, I excluded 2008-2009 crash since it caused EM stock to drop more significantly.

Would you rather be a stock holder or a bond holder?

I seem to think bonds due to lower SD and reasonable CAGR.

Thanks.

[Deleted]

Looks like EEM had good years in 2009-2010. If I had checked from 2011 - 2022, I would not be investing in EEM.

[retiredat48]

Hi steady...your info has a time period bias.

EmgMkts stocks had a rather poor decade. So comparison to bonds shows bond returns in a favorable light.

If one goes back to the decade before (before 2008), one finds that in about five of the ten years, EM stocks were the top performers, greatly outpacing bond returns. Reference Callan Periodic Investment Return Tables.

Note that things like value versus growth performance, and international versus USA, tend to go in ten year cycles.

Are we poised for the next decade to have EM stocks return to higher performers? And are the rather low yields of bond funds today a clue as to lower expected total EM Bond returns in the future? And then the question of whether or not to buy bond funds that "hedge", or not, versus the dollar.

R48

[steadyeddy]

Mar 20, 2022 16:10:54 GMT retiredat48 said:

Hi steady...your info has a time period bias.

EmgMkts stocks had a rather poor decade. So comparison to bonds shows bond returns in a favorable light.

If one goes back to the decade before (before 2008), one finds that in about five of the ten years, EM stocks were the top performers, greatly outpacing bond returns. Reference Callan Periodic Investment Return Tables.

Note that things like value versus growth performance, and international versus USA, tend to go in ten year cycles.

Are we poised for the next decade to have EM stocks return to higher performers? And are the rather low yields of bond funds today a clue as to lower expected total EM Bond returns in the future? And then the question of whether or not to buy bond funds that "hedge", or not, versus the dollar.

R48

retiredat48, so.. bottom line... would you buy EM stock or EM bonds now?

[retiredat48]

Mar 20, 2022 23:38:47 GMT steadyeddy said:

Mar 20, 2022 16:10:54 GMT retiredat48 said:

Hi steady...your info has a time period bias.

EmgMkts stocks had a rather poor decade. So comparison to bonds shows bond returns in a favorable light.

If one goes back to the decade before (before 2008), one finds that in about five of the ten years, EM stocks were the top performers, greatly outpacing bond returns. Reference Callan Periodic Investment Return Tables.

Note that things like value versus growth performance, and international versus USA, tend to go in ten year cycles.

Are we poised for the next decade to have EM stocks return to higher performers? And are the rather low yields of bond funds today a clue as to lower expected total EM Bond returns in the future? And then the question of whether or not to buy bond funds that "hedge", or not, versus the dollar.

R48

retiredat48 , so.. bottom line... would you buy EM stock or EM bonds now?

I'm currently in the Jeff Gundlach camp...that is, watching closely, but have not been been buying.  Gundlach stated same; he recommends EM stocks and bonds, for long term, but he has not begun any purchases. 


I did reduce EM exposure in 2020 downdraft and have not replenished.  I also began exit-campaign a year ago, exiting from any/all CHINA exposure from my portfolio.

Am watching EM stock funds that are zero percent China...and perhaps zero percent Russia!

If I start buying I will post same.

R48