This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Emerging Bond Funds Offer Steadier Bet

NEW YORK ( TheStreet) -- Shareholders, excited about the prospects for countries such as Brazil and China, have been pouring cash into emerging markets stock funds. But the stocks can be dicey, as investors learned in 2008 when these funds lost 54%, according to Morningstar (MORN ).

For a steadier bet on developing countries, consider mutual funds that hold their bonds, which have proved less volatile than stocks during the crashes that have plagued emerging markets.

Emerging markets bonds are one of the top-performing fund categories of recent years. In the 10 years through June, these funds returned 11% annually, outdoing stock funds that invest in the same countries by more than a percentage point. They beat every other fixed-income category by a wide margin.

A bright outlook for emerging economies is fueling gains. While the developed world struggles to cope with the credit crisis, many emerging economies are in healthier shape because their consumers and banks didn't take on excessive debt. Countries such as Indonesia and Chile seem poised to grow faster than the U.S. for years to come.

The picture for emerging bonds began improving after the group suffered severe setbacks in the 1990s. When financial markets in Russia and Asia collapsed in 1998, the bond funds recorded their worst year ever, losing 26%. In 1999, the depressed bonds began a remarkable bull market, producing double-digit returns for eight straight years.

The bonds soared as governments in emerging economies reformed their ways. Once troubled by deficit spending and heavy debt loads, countries in Latin America and Asia tightened their belts. Governments balanced budgets and sought to control inflation. With global trade booming, emerging economies prospered. Instead of being debtors, many countries became creditors with big holdings of foreign currencies.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $113.29 0.33%
FB $91.01 1.43%
GOOG $630.38 -1.13%
TSLA $248.48 2.26%
YHOO $33.14 -1.63%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs