Market Vectors ETFs
Van Eck Mutual Funds
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FINE: In one word, the value of an unconstrained approach to emerging markets
bond investing is flexibility. The market changed a lot in the past 20 years.
At first, it was only hard currency bonds. Then came hard currency corporates
followed by local currency sovereigns. Nowadays, local currency corporates are
becoming more prominent. Having an unconstrained mandate is key to optimizing
the portfolio using all four sub asset classes. In the future, I think you
are going to see local currency corporates become increasingly important.
One of the most important advantages is flexibility. Some of the specific
examples of how this flexibility helps you on a day-to-day basis are: number
one, you can optimize your country view. If I like Brazil, I shouldn't be
forced into investing in a hard currency bond. I should have the opportunity
to invest in a local currency bond, maybe inflation linked. I should also
have the flexibility to express my view through a corporate bond, whether
it's in local currency or hard currency. The question is if I like the
country, what's the best way to express it?
Number two, I can optimize the portfolio. These days, hard currency high-rated
bonds have tended to rally during risk-off environments. Local currency bonds
have tended to sell-off during risk-off environments. If you're proactive, you
can position the portfolio for different and broader market environments.
Third, and maybe most importantly, all the mandates are changing. You'll see
blended funds, which is an attempt to move towards unconstrained. Even here,
there are minimums and maximums. You've got to have a minimum allocation in
local currency, a minimum in corporate bonds, you can't have this much, you
can’t have more than a certain amount, etc. That is an intermediate step, but I
think funds are moving towards the direction of fully unconstrained. Blended
is an attempt towards this, but it's not the full step towards what I think
is the right approach, unconstrained.
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Please note that Van Eck Securities Corporation offers investment products that
invest in the asset class(es) included in this video. Investments in emerging
markets securities tend to be more volatile and less liquid than securities
traded in developed countries. Emerging markets debt investments are subject to
credit risk, interest rate risk, sovereign debt risk, tax risk, and risks
associated with non-investment grade securities.Investing involves risk,
including possible loss of principal. An investor should consider investment
objectives, risks, charges and expenses of the investment company carefully
before investing. Please read the prospectus and summary
prospectus carefully before
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