Tags: Gundlach | emerging | market | bonds

Gundlach Bullish on Dollar-Denominated Emerging Market Bonds

By    |   Sunday, 01 Dec 2013 06:17 PM

Dollar-denominated emerging market bonds now represent star bond-fund manager Jeffrey Gundlach's favorite sector of the fixed-income market.

U.S. high-yield corporate bonds have performed well this year, generating a return of about 7 percent, the DoubleLine Capital CEO noted in Barron's. Meanwhile, dollar-denominated emerging-market bonds have dropped 6 or 7 percent.

"This has created quite a dichotomy in value, and the yields and prospective returns on the emerging market sector should be something investors look at," he said.

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"A well-diversified, dollar-denominated — so you don’t have currency risk — emerging-market bond fund is the single-best place for investors to be allocating today."

Gundlach also is positive on closed-end municipal bond funds, as many of them still trade at substantial discounts to net asset values, despite the recent rally by munis.

And when it comes to interest rates, investors are too worried about increases, Gundlach says. "People are absolutely freaking out about interest-rate risk," he said.

Bond yields can stay low "for a multi-year period" with inflation virtually non-existent and the Federal Reserve determined to keep interest rates low, Gundlach said.

As for emerging markets, J.P. Morgan Asset Management is committing money to corporate bonds there, Pierre-Yves Bareau, the firm's chief investment officer for emerging-market debt, told The Wall Street Journal.

"The concern and the panic over tapering was probably overplayed," he said. "Markets have come back to a more rational stance."

Emerging markets plummeted earlier this year on talk from Federal Reserve officials that the Fed could soon taper its quantitative easing.

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Related Articles:



http://blogs.barrons.com/incomeinvesting/2013/11/26/gundlach-best-bond-bet-is-dollar-denominated-em-debt/?mod=BOLBlog



http://online.wsj.com/news/articles/SB10001424052702303936904579180793930457788

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Dollar-denominated emerging market bonds now represent star bond-fund manager Jeffrey Gundlach's favorite sector of the fixed-income market.
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2013-17-01
Sunday, 01 Dec 2013 06:17 PM
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