For your Sunday night viewing pleasure I give you this week's edition of PBS' WealthTrack which once again explores the so-called ESG (Environment, Social, Governance) niche of the market for those who are socially conscious about their investments. Consuelo interviews Kristin Ceva who examines the ESG sector in terms of the opportunities it presents relative to buying debt in emerging markets.
As we all know, interest rates are at historic lows, in fact as pointed out below at 5,000 year lows. Some countries such as in Europe and Japan have actually been issuing bonds with negative interest rates, something some analysts have called nuts. But is it really nuts? Negative interest just means that if the investor desires absolute safety, they have to pay for the privilege. But the real purpose of negative interest is to send the message -- don't buy bonds, buy stocks instead. And this is exactly what's been happening. Not so nuts, message received!
Hope you're all enjoying this wonderful weather on this holiday weekend.
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September 2, 2021
Dear WEALTHTRACK Subscriber,
One of the biggest challenges for investors since the global financial crisis has been finding income. Despite more than ten years of continuous predictions that yields on U.S. Treasuries and other developed country bonds couldn’t possibly go any lower, they have. To put it into historical perspective, Richard Sylla, co-author of the definitive A History of Interest Rates has told us on several WEALTHTRACK episodes that interest rates are at 5000-year lows. As the Financial TImes recently reported, negative-yielding debt has “ballooned to more than $16.5tn, the highest in six months,” mostly in Europe, but also in Japan. With yields below zero, i.e. negative, investors are actually paying borrowers to buy their bonds, and if held to maturity those investors are guaranteed to have a loss! Kind of nuts, but that is the reality unless you look elsewhere, outside of the developed world where yields are more normal. That is where this week’s guest can help us. She is Kristin Ceva, Senior Portfolio Manager, directing Payden & Rygel’s nearly $14bn emerging debt strategies. She is also a member of the firm’s Investment Policy Committee. The independent global investment advisor oversees $145.5bn in assets, largely in fixed income for institutional clients but has a broad lineup of mutual funds as well. It is also an active participant in ESG investing which we will discuss. Ceva has managed its Payden Emerging Markets Bond Fund since 1998. The $1 billion dollar fund has delivered average annualized returns of nearly 9 percent a year under Ceva’s leadership and ranks in the top 5 percent of emerging market funds for the last decade. It is rated 4-star by Morningstar with a Bronze analyst rating. Emerging market debt is a large, diverse and evolving investing universe which is sorely underrepresented in most individual portfolios. I’ll begin the interview by asking Ceva to bring us up to speed on the state of the EM fixed-income markets and what investors need to know about the opportunities it presents. In this week’s EXTRA feature Ceva discusses her work with EM governments to integrate ESG (Environmental, Social and Governance) principles into the sovereign debt market. If you miss the show on public television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify. Thanks for joining us. Have a super Labor Day holiday, and make the week ahead a healthy, profitable and productive one! Best regards, Consuelo |
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