{"id":42260,"date":"2023-07-30T10:52:24","date_gmt":"2023-07-30T14:52:24","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/a-hidden-way-to-earn-12-1-from-a-dipping-dollar\/"},"modified":"2023-07-30T10:52:27","modified_gmt":"2023-07-30T14:52:27","slug":"a-hidden-way-to-earn-12-1-from-a-dipping-dollar","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=42260","title":{"rendered":"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar"},"content":{"rendered":"
\n

AI is popular. Emerging market bonds, needless to say, are not<\/em>.<\/p>\n

Which is perfect<\/em> for us responsible contrarians striving to retire on dividends. The more neglected an asset, the better.<\/p>\n

But what\u2019s the catalyst for these big yields? I\u2019m talking dividends between 6.5% and 12.1%<\/em>, by the way.<\/p>\n

That\u2019s easy. When the buck gets banged up, these funds soar. And that is exactly what is playing out today.<\/p>\n

The US dollar has been en fuego for the past decade. I know, it\u2019s hard to believe given noise from the \u201cdemise of the dollar\u201d crowd. But these guys have lost a lot of money betting against the buck.<\/p>\n

Why the rally in the greenback? Lots of reasons: the strength of the U.S. economy, relative economic weakness in other parts of the world, and the dollar\u2019s status as a safe-haven protection against the unknown.<\/p>\n

<\/fbs-ad><\/p>\n

But it\u2019s increasingly looking likely that the U.S. dollar has peaked, at least on a medium-term basis. The Federal Reserve has signaled, for now, at least a pause in its interest-rate hikes. On the horizon\u2014a horizon that keeps moving out of analysts\u2019 crosshairs, mind you\u2014a recession might be brewing. And inflation, while marginally higher last month, has spent a full year in retreat.<\/p>\n

In other words: The dollar should continue easing in the months ahead. And that is going to light a fire under emerging-market bonds (EMBs).<\/p>\n

A weak buck is a big catalyst for EMBs. Foreign countries and companies often borrow in U.S. dollars rather than their own currency\u2014but they still have to service the debt in their own currency, or buy U.S. dollars to do it, and a burlier U.S. dollar makes that more difficult. Thus, EMBs typically suffer when the dollar is rising, which is why it\u2019s best to buy EMBs when the dollar is heading flat to lower.<\/p>\n

So, if the time to buy is now, what should we be buying?<\/p>\n

As always, with debt, look to closed-end funds (CEFs), which can turbocharge both the upside opportunity and the potential yields. Right now, a few EMB
\n EMB
\n <\/fbs-ticker>-focused CEFs yield as much as 12.1%.<\/p>\n

One way to stick a toe into EMBs is with a global fund\u2014a CEF that invests around the world, so emerging-market bonds are part of the platter, but not the whole enchilada. The AllianceBernstein Global High Income Fund (AWF, 7.9% distribution rate)<\/strong> does just that while throwing off a fat yield of nearly 8%.<\/p>\n

Director Paul DeNoon\u2014who helmed AWF to \u201cBest Fund Over 10 Years\u201d standing with Lipper between 2012 through 2015\u2014invests in everything from U.S. Treasuries to South African bonds to mortgage-backed securities. He mostly sticks to higher-rated junk debt; below-investment-grade corporates make up more than three-quarters of the fund right now. EMBs are currently a small portion of the portfolio, though Paul might very well increase his exposure if the opportunity seems ripe.<\/p>\n

When it came time for us to sell out of emerging-market debt, we held on to AWF. That\u2019s largely because Paul is a flexible manager. When EMBs make sense, he uses them. If not, he has other weapons in his arsenal.<\/p>\n

A more direct way to invest in EMBs is the Western Asset Emerging Markets Debt Fund (EMD, 9.5% distribution rate)<\/strong>, which features not only a high yield of nearly 10%, but also monthly distributions.<\/p>\n

EMD is a broad, diversified basket of emerging-market debt that\u2019s almost entirely invested in U.S. dollar-denominated bonds. It spreads its investments across sovereign (45%), corporate (30%) and quasi-sovereign (14%) bonds, with a sprinkling of local-currency-debt and other investments.<\/p>\n

Credit quality largely straddles the junk line, with 37% in BBB debt, and 30% in BB debt. And geographically speaking, there\u2019s little concentration worry here. EMD invests in dozens of countries, with Mexico the largest exposure at just 9%; Indonesia (5%), Brazil (5%) and Oman (4%) are among other highly represented nations.<\/p>\n

Despite a pretty high use of leverage, at 28%, EMD isn\u2019t an overly volatile fund.<\/p>\n

You might switch tactics and consider the Morgan Stanley Emerging Markets Domestic Debt Fund (EDD, 6.5% distribution rate)<\/strong>.<\/p>\n

Like EMD, EDD offers a broad swath of emerging-market debt across the world, but it does so in primarily non-U.S.-denominated bonds. Risks are somewhat similar\u2014a strong dollar can harm these bonds\u2014but the pain is typically felt at the extremes. That is, rampant global inflation can weigh on local-debt EMBs, as can deep, extended recessions.<\/p>\n

Comparatively, though, EDD has held up quite well compared to its USD-denominated brethren. Moderate use of leverage (13%) helps keep volatility muted, too.<\/p>\n

The abrdn Asia-Pacific Income Fund (FAX, 12.1% distribution rate)<\/strong> is a specific bet on emerging-market debt, and one with a mouth-watering yield\u2014paid monthly\u2014to boot!<\/p>\n

FAX invests in EM sovereign, quasi-sovereign and corporate debt from Asian and Pacific countries such as India, Indonesia and China. It also leans most heavily on BBB-rated bonds, sticking largely to the investment-grade side of the bond rating scale.<\/p>\n

Asia-Pacific\u2019s biggest strength\u2014a heaping helping of debt leverage, at 32% currently\u2014is also its biggest drawback. When EMBs are in vogue, we\u2019ve used FAX to turbo-charge returns in the space. But it plummets hard when they fall out of favor.<\/p>\n

Brett Owens is chief investment strategist for <\/em>Contrarian Outlook<\/em>. For more great income ideas, get your free copy his latest special report: <\/em>Your Early Retirement Portfolio: Huge Dividends\u2014Every Month\u2014Forever.<\/p>\n

Disclosure: none<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more neglected an asset, the better. But what\u2019s the catalyst for these big yields? I\u2019m talking dividends between 6.5% and 12.1%, by the way. That\u2019s easy. When the buck gets banged […]<\/p>\n","protected":false},"author":1,"featured_media":42261,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-42260","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"\nA \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar | iFintechWorld<\/title>\n<meta name=\"description\" content=\"AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=42260\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=42260\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-07-30T14:52:24+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-30T14:52:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1690728745_0x0.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=42260#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=42260\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar\",\"datePublished\":\"2023-07-30T14:52:24+00:00\",\"dateModified\":\"2023-07-30T14:52:27+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=42260\"},\"wordCount\":909,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Investing\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=42260#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=42260\",\"url\":\"https:\/\/ifintechworld.com\/?p=42260\",\"name\":\"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-07-30T14:52:24+00:00\",\"dateModified\":\"2023-07-30T14:52:27+00:00\",\"description\":\"AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=42260#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=42260\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=42260#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar | iFintechWorld","description":"AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=42260","og_locale":"en_US","og_type":"article","og_title":"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar | iFintechWorld","og_description":"AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more","og_url":"https:\/\/ifintechworld.com\/?p=42260","og_site_name":"iFintechWorld","article_published_time":"2023-07-30T14:52:24+00:00","article_modified_time":"2023-07-30T14:52:27+00:00","og_image":[{"width":1200,"height":800,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1690728745_0x0.jpg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=42260#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=42260"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar","datePublished":"2023-07-30T14:52:24+00:00","dateModified":"2023-07-30T14:52:27+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=42260"},"wordCount":909,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Investing"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=42260#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=42260","url":"https:\/\/ifintechworld.com\/?p=42260","name":"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-07-30T14:52:24+00:00","dateModified":"2023-07-30T14:52:27+00:00","description":"AI is popular. Emerging market bonds, needless to say, are not. Which is perfect for us responsible contrarians striving to retire on dividends. The more","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=42260#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=42260"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=42260#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"A \u2018Hidden\u2019 Way To Earn 12.1% From A Dipping Dollar"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/42260","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42260"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/42260\/revisions"}],"predecessor-version":[{"id":42262,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/42260\/revisions\/42262"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/42261"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42260"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42260"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42260"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}