Brent David and Anthony Kettle explain why the structural forces reshaping global capital flows could mark a turning point for investing in emerging markets.
For fifteen years, the investment playbook for international investors was simple: buy U.S. stocks, hold dollars, and don't hedge.
During this time, the dollar served as a hedge for equity risk and when the market pulled back, the subsequent dollar rally somewhat protected portfolios. However, the jarring effects of Liberation Day have fundamentally broken that pattern and as a result have opened opportunities for Emerging Market (EM) investors.
"Investors don't want to be running US assets unhedged anymore. Hedge ratios were at historic lows and the fact that they've started normalising back is a significant portion of the dollar weakness story," says Brent David, Senior Portfolio Manager in RBC BlueBay's Emerging Markets team.
Read more of the article in our Focus guide with RBC Bluebay Asset Management.
By filling out the form, you agree to the data protection statement below.
