Best Blogs of the Week #228
Two posts this week, both looking at international market. Broad financial news outlets seemed highly focused on fixed income markets with prognostications related to US Treasuries and the negative rate via the BOJ. We thought to eschew posts similarly guessing at the future for two with sound viewpoints on critically important investment opportunities.
Columbia – Global emerging markets: Headwinds and tailwinds– Countries that are not dependent on commodity exports are well-positioned to benefit from domestic-led growth. We are finding opportunities in places like Eastern Europe, India and Mexico. We believe for this group that macro imbalances have largely dissipated, so growth can move forward on a sustainable path.
WisdomTree – Rethink Your International Allocations– But can you time those adaptive hedging moves yourself? Research we have conducted with Record Currency Management shows that it’s possible to add value over passive hedging (or unhedging) all the time. Over the last 28 years, determining when to currency hedge using a three-factor model of interest rate differentials, momentum and currency valuations has added more than 140 bps annually to the returns of a broad international hedged-equity strategy while maintaining the vast majority of the volatility reduction of strategic passive hedging.
