Where To Invest This Quarter, Part 1

Where To Invest This Quarter, Part 1

over 3 years ago2 mins

Professional money managers’ latest investment tips reflect a shift away from America – with Taiwan and India perhaps of particular interest for Finimizers looking to fine-tune their own strategies…

What does this mean?

Data giant Bloomberg regularly taps professional investors for their thoughts on where best to park a spare $10,000 right now. Ironically, this quarter’s round of recommendations have in common a horror for the dollar: the US currency’s international value recently hit a two-year low, while rising government debt and declining savings could send it down another 35% by the end of next year.

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The message to investors? Expand your exposure elsewhere, according to Sierra Mutual Funds. The firm’s investment chief (whose prediction of gains for convertible bonds last quarter would’ve netted followers a 15% return) points to long-term increases in economic growth, living standards, and productivity outwith the US as reasons to venture abroad. Research also shows that, in years where the dollar is weak, international shares have historically risen 85% of the time – perhaps helped by the exchange rate boosting overseas commodity prices.

What's bad for the dollar is generally good abroad
What's bad for the dollar is generally good abroad

It’s not just foreign stocks that are in favor, however: the William Blair Macro Allocation Fund’s head honcho concurs with our recent Premium Insight on Chinese bonds. He already sees 5-year government debt as the most attractive “sovereign” bonds anywhere; what’s more, rising international investment and pressure on future economic growth could lead to lower Chinese interest rates, giving existing bond prices a boost (here’s why) 💹

Why should I care?

As ever, exchange-traded funds (ETFs) provide a simple and relatively low-cost way for Finimizers to make diversified plays across a range of different investments in one fell swoop. And if the dollar’s loss does indeed turn out to be emerging markets’ gain, Sierra is specific about where it sees the biggest benefit. The iShares MSCI Taiwan ETF and WisdomTree Indian Earnings Fund ETF offer exposure to promising local tech stocks and supportive demographics (check out our Investing In India Pack for more on this).

It's been a good decade for this Taiwanese ETF (Source: iShares)
It's been a good decade for this Taiwanese ETF (Source: iShares)

The small VanEck Vectors ChinaAMC China Bond ETF, meanwhile, represents an easy avenue for US-based investors to access "decorrelating" Chinese debt – with 20% in government bonds and 67% in corporate.

Looking for less exotic ways to protect yourself against a declining dollar? Never fear – we’ll be back tomorrow with a look at how cyclical stocks’ time may have finally come… 👀

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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