NEW YORK ( TheStreet) -- Worried about the uncertain economic outlook, investors have been dumping emerging market bonds and racing to buy Treasuries. During the past three months, emerging market bond funds have lost 3.4%, while long government funds have gained 19.8%, according to Morningstar.But not all emerging bond funds have suffered equally. During the past three months, Fidelity New Markets Income (FNMIX) about broke even. The fund avoided trouble by following the cautious approach favored by portfolio manager John Carlson. The Fidelity manager shuns the lowest-quality bonds and emphasizes government securities that are issued in dollars -- not in foreign currencies. The dollar bonds often prove resilient in downturns. "Our first rule is to play good defense and avoid blowups," says Carlson.
Finding Jewels in Emerging Markets Bond Funds
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