Seeking Alpha

Mad Hedge Fund ...'s  Instablog

Mad Hedge Fund Trader
1,993 Followers
5 Following
Send Message
John Thomas graduated with a bachelor’s degree in biochemistry with honors and a minor in mathematics from the University of California at Los Angeles (U.C.L.A.) in 1974. He moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities house. Thomas became fluent in... More
My company:
The Mad Hedge Fund Trader
  • Take a Look on Foreign Bond ETF's 0 comments
    Sep 23, 2009 11:11 PM | about stocks: LQD, PCY
     A number of readers have asked me tocome up with a safe, high yielding investment in which to hide out incase the equity markets swoon again. That means they are looking for a security that offers a high fixed return, denominated in a strong currency that will benefit from future upgrades that will boost theprincipal over time. All of that is another name for the Invesco PowerShares Emerging Market Sovereign Debt ETF (PCY). The fund has 40%of its assets in bonds issued in Latin America and 31% in Asia, with the bulk of the maturities exceeding ten years. The two year old fund now boasts $340 million in market cap and pays a handy 6.42% dividend.This beats the daylights out of the nine basis points you currently earn for cash, the 3.40% yield on 10 year Treasuries, and still exceeds the 6.42% dividend on the iShares Investment Grade Bond ETN (LQD),which buys predominantly single “A” US corporates. The big difference here is that have a rosy future of further creditup grades to look forward to. It turns out that many emerging markets have little or no debt because until recently, investors thought theircredit quality was too poor. No doubt a history of defaults in Brazil and Argentina in the seventies and eighties is at the back of theirminds. With US government bond issuance going through the roof, the shoe is now on the other foot. A price appreciation of 125% over the past year tells you this is not exactly an undiscovered concept. Still,it is something to keep on your “buy on dips” list.
    Stocks: LQD, PCY
Back To Mad Hedge Fund Trader's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Full index of posts »
Latest Followers

Latest Comments


Most Commented
Posts by Themes
Davos, Gold, Oil
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.