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A Market to Revisit

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Emerging markets ("EM") government bonds, particularly those denominated in local currencies, have bounced back in 2016. It's time to look again at what they can offer. A Market to Revisit.

Emerging markets (”EM”) government bonds, particularly those denominated in local currencies, have bounced back in 2016. It’s time to look again at what they can offer. A Market to Revisit.

The past few years have not been kind to EM local currency bonds. Falling commodity prices and concerns about slowing global growth resulted in weak performance across many EM asset classes. Local currency bonds were particularly impacted by the robust U.S. dollar, which remained strong throughout 2015, and the prospect of four potential Federal Open Market Committee rate hikes in 2016. These headwinds caused investors to push valuations down to levels of extreme weakness, particularly on several EM currencies, which may have been oversold heading into 2016.

Q1 Tailwinds Provide Support

However, the Federal Reserve’s sentiment may have changed. The Fed appears to be taking a more dovish stance and the market is now expecting fewer rate hikes this year. Some immediate results could include a pullback in the U.S. dollar and the re-emergence of a risk-on appetite. These tailwinds have been strengthened by the first quarter rebound in commodity prices and the prospect of pro-growth political reform in several EM countries.

EM local currency bonds benefited from these supportive factors, which contributed to a return of 11.02% in the first quarter, as represented by the J.P. Morgan GBI-EM Diversified Index, significantly outperforming EM hard currency sovereign bonds and corporates. Every country in the index had both positive local bond market returns and currency appreciation for the period. Dedicated local currency funds also received significant inflows towards the end of the quarter.

Positive Flows as Investors Take Notice

Why the positive flows? After years of volatility and weak performance, EM local currency bonds may be underrepresented in many investors’ portfolios. In addition to market conditions being favorable in the first quarter, local currency bonds have some particularly attractive characteristics that stem from two distinct sources of return they provide: local interest rates and currencies.

Because of these distinct drivers of return, local currency EM bonds have exhibited low historical correlations with other segments of the fixed income market, especially core U.S. investment grade sectors, as shown below. Local currency EM bonds have also historically provided higher yields versus other EM bond sectors, with an investable universe that tends to be skewed more towards higher quality issuers. For example, 84% of local currency EM government bonds were rated investment grade at the end of the quarter, versus 63% of those denominated in hard currencies, as measured by the BofA Merrill Lynch Emerging Markets External Sovereign Index.

Low Correlation to Certain U.S. Fixed Income Sectors

VanEck1

As of March 31, 2016
(Click to enlarge) Source: Morningstar.

Historically Higher Yields Versus Other EM Sectors

As of March 31, 2016

VanEck2

(Click to enlarge) Source: FactSet. Index performance is not illustrative of fund performance. Fund performance current to the most recent month end is available by visiting vaneck.com/emlc.

These unique drivers of return are also sources of risk, and should be considered along with credit, economic, political and other risks associated with EM investments.

We believe that local currency EM bonds may potentially provide unique diversification benefits within a global fixed income portfolio, with both potentially higher yields and higher credit quality versus other EM fixed income sectors. For investors who have reduced their exposure in recent years, we believe it is a market worth revisiting.

Investors interested in this space may find easy access to local currency denominated bonds issued by emerging markets governments through VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (EMLC).

Authored by William Sokol, Product Manager, ETFs

ETFs is authored by VanEck thought leaders. VanEck is the sponsor of VanEck Vectors ETFs and is currently among the largest providers of exchange traded funds (ETFs) in the U.S. and worldwide. VanEck Vectors ETFs empower investors to help build better portfolios with access to compelling investment themes and strategies. Our ETFs span many global asset classes, and are built to be transparent, liquid, and pure-play reflections of target markets.

IMPORTANT DISCLOSURE

1 Source: J.P. Morgan Emerging Markets Bond Index Monitor, as of 3/31/16.
2 Correlation measures how two securities move in relation to each other.

This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.

The indices listed are unmanaged indices and do not reflect the payment of transaction costs, advisory fees, or expenses that are associated with an investment in any underlying exchange-traded funds. Historical performance is not indicative of future results; current data may differ from data quoted. Indexes are unmanaged and are not securities in which an investment can be made.

JPMorgan GBI-EM Global Diversified Index (GBI-EM) tracks local currency denominated EM government debt.

BofA Merrill Lynch Emerging Markets External Sovereign Index (EMGB) tracks US dollar and Euro denominated EM government debt.

The asset classes referenced in the charts are represented by the following indices: High Yield Bonds: Barclays US Corporate High Yield Index measures the market of U.S. dollar denominated, non-investment grade, fixed-rate, taxable corporate bonds. Investment Grade Corporate Bonds: Barclays US Corporate Investment Grade Index tracks the investment grade, fixed-rate, taxable, corporate bond market. Inflation Linked Bonds: Barclays US Government Inflation Linked Index tracks US Treasury Inflation Protected Securities (TIPS) with at least one year until final maturity Broad US Investment Grade: Barclays US Aggregate Bond Index tracks the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS, ABS and CMBS. Treasuries: Barclays US Treasury Index tracks U.S. dollar-denominated, fixed-rate debt with at least one year until final maturity issued by the U.S. Treasury. EM Local Sovereigns: JPMorgan GBI-EM Global Diversified Index (GBI-EM) tracks local currency denominated EM government debt. EM USD & EUR Sovereigns: BofA Merrill Lynch Emerging Markets External Sovereign Index (EMGB) tracks US dollar and Euro denominated EM government debt. EM USD Corporates: BofA Merrill Lynch US Emerging Markets Liquid Corporate Plus Index (EMCL) tracks the US dollar denominated nongovernment debt of EM.

Diversification does not assure a profit nor protect against loss.

An investment in the Fund may be subject to risk which include, among others, credit risk, call risk, interest rate risk, and sovereign defaults, all of which may adversely affect the Fund. High yield bonds may be subject to greater risk of loss of income and principal and are likely to be more sensitive to adverse economic changes than higher rated securities. International investing involves additional risks which include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability. Changes in currency exchange rates may negatively impact the Fund’s return. 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 Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.

VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (EMLC) is not sponsored, endorsed, sold or promoted by J.P. Morgan and J.P. Morgan makes no representation regarding the advisability of investing in EMLC. J.P. Morgan does not warrant the completeness or accuracy of the J.P. Morgan GBI-EMG Core Index. ”J.P. Morgan” is a registered service mark of JPMorgan Chase & Co. © 2016. JPMorgan Chase & Co. All rights reserved.

Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will generally decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com/etfs. Please read the prospectus and summary prospectus carefully before investing.

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De mest populära ETFerna hos Nordnet just nu

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För att hjälpa dig att hitta spännande ETFer har Nordnet tagit fram en inspirationssida. Där kan du se vilka ETFer som är mest ägda och har bäst utveckling inom olika regioner och branscher. Här är de 10 mest populära ETFerna oavsett bransch och region. De mest populära ETFerna hos Nordnet just nu.

För att hjälpa dig att hitta spännande ETFer har Nordnet tagit fram en inspirationssida. Där kan du se vilka ETFer som är mest ägda och har bäst utveckling inom olika regioner och branscher. Här är de 10 mest populära ETFerna oavsett bransch och region. De mest populära ETFerna hos Nordnet just nu.

NamnAntal ägareKortnamn
iShares Core S&P 500 UCITS ETF USD (Acc)61 089SXR8
iShares Core MSCI World UCITS ETF USD (Acc)55 745EUNL
iShares Core MSCI EM IMI UCITS ETF USD (Acc)32 682IS3N
iShares S&P 500 Information Technology Sector UCITS ETF USD (Acc)31 628QDVE
iShares Global Clean Energy UCITS ETF USD (Dist)22 891IQQH
iShares Automation & Robotics UCITS ETF USD (Acc)15 4592B76
Xtrackers Euro STOXX 50 UCITS ETF 1C14 484XESC
iShares Core S&P 500 UCITS ETF USD (Dist)14 304IUSA
iShares MSCI ACWI UCITS ETF USD (Acc)12 385IUSQ
XACT OMXC25 ESG12 281XACT OMXC25

Så handlar du med ETFer

Det finns i dagsläget fler än 1 600 ETFer på Nordnets plattform och du kan hitta någon i så gott som alla sektorer och regioner. Det svåra är snarare hur du ska hitta rätt, i det omfattande utbudet.

Med Nordnets ETF-sorterare får du hjälp att söka ut ETFer som matchar dina önskemål. Du klickar helt enkelt i vad du söker och får en lista anpassad till detta.

Innan du köper ETFer finns det några saker det är bra att ha koll på, nämligen:

• Vad ETFen ger exponering mot

• Vad den har för förvaltningsavgift

• Vad är det för spread mellan köp och sälj. Detta blir indirekt en kostnad för dig som investerar i ETFen.

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SXRY ETF spårar den italienska aktiemarknaden

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iShares FTSE MIB UCITS ETF (Acc) (SXRY ETF) med ISIN IE00B53L4X51, strävar efter att spåra FTSE MIB-index. FTSE MIB-index spårar de 40 största italienska företagen.

iShares FTSE MIB UCITS ETF (Acc) (SXRY ETF) med ISIN IE00B53L4X51, strävar efter att spåra FTSE MIB-index. FTSE MIB-index spårar de 40 största italienska företagen.

Den börshandlade fondens TER (total cost ratio) uppgår till 0,33 % p.a. ETFen replikerar det underliggande indexets prestanda genom fullständig replikering (köper alla indexbeståndsdelar). Utdelningarna i ETFen ackumuleras och återinvesteras.

iShares FTSE MIB UCITS ETF (Acc) har tillgångar på 211 miljoner GBP under förvaltning. Denna ETF lanserades den 26 januari 2010 och har sin hemvist i Irland.

Varför SXRY?

Exponering mot brett diversifierade italienska företag

Direktinvestering i 40 italienska företag

Exponering för enskilda länder och stora företag med börsvärde

Investeringsmål

Fonden strävar efter att följa resultatet för ett index som består av 40 av de största och mest likvida italienska företagen.

Handla SXRY ETF

iShares FTSE MIB UCITS ETF (Acc) (SXRY ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
London Stock ExchangeGBXCMB1
gettexEURSXRY
Stuttgart Stock ExchangeEURSXRY
BATS Chi-X EuropeUSDCSMIBx
Bolsa Mexicana de ValoresMXNSXRYN
Borsa ItalianaEURCSMIB
London Stock ExchangeEURCMIB
SIX Swiss ExchangeEURCSMIB
XETRAEURSXRY

Största innehav

KortnamnNamnSektorVikt (%)ISINValuta
UCGUNICREDITFinans11,49IT0005239360EUR
ISPINTESA SANPAOLOFinans11,35IT0000072618EUR
ENELENELUtilities9,88IT0003128367EUR
STLAMSTELLANTIS NVSällanköpsvaror8,70NL00150001Q9EUR
RACEFERRARI NVSällanköpsvaror8,55NL0011585146EUR
ENIENIEnergi6,10IT0003132476EUR
GASSICURAZIONI GENERALIFinans5,86IT0000062072EUR
STMMISTMICROELECTRONICS NVInformationsteknologi4,74NL0000226223EUR
PRYPRYSMIANIndustri2,93IT0004176001EUR
MONCMONCLERSällanköpsvaror2,47

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Notes from our research on recent crypto moves: ideal moment for crypto index investing?

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Recent market movements reinforce the investment case for crypto index investing and we believe that now is the time to build a long crypto exposure via the Nasdaq Crypto Index (NCI) (or to boarden the exposure vs. a single asset Bitcoin ETF position).

Recent market movements reinforce the investment case for crypto index investing and we believe that now is the time to build a long crypto exposure via the Nasdaq Crypto Index (NCI) (or to boarden the exposure vs. a single asset Bitcoin ETF position).

Here are some commentaries from our Research:

• NCI surges +18% last week (Nov 3 to 10) while Bitcoin was up +15%: driven by market optimism following Trump’s election and a 25 bps rate cut by the Federal Reserve

• Bitcoin breaks new highs: Closed the week above $80k for the first time, leading a market rally

• Outperformance across NCI constituents:

o Smart contract platforms led gains:

 Cardano: +72.6%

 Avalanche: +31.4%

 Ethereum: +27.2%

 Solana: +25.4%

o All constituents (except LTC) outperformed Bitcoin’s gains, see below for last week:

• BTC Dominance tested 60% and retraced: Historically, this has either signaled the end of Bitcoin outperformance or the start of a powerful Altseason

• Strong performance outlook: Momentum in NCI’s broad diversification positions it well for potential long-term gains as macro and regulatory conditions improve

Nasdaq Crypto Index – Constituents performance Nov 3 – Nov 10:

Evolution of Bitcoin dominance:

Why consider Nasdaq Crypto Index (NCI) now?

• Diversification beyond Bitcoin: Capture both Bitcoin’s strength and the upside potential of emerging crypto assets in one allocation.

• Positioning for Altseason: NCI provides targeted exposure to key market segments poised to benefit from broader market growth.

• Current allocation:

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