Posted June 19, 2014 10:50 pm by Comments

WealthManagement.com has reported on the presentation given by Michael Hasenstab, bond fund manager at Franklin Templeton Investments, during a presentation at Morningstar’s Investment Conference in Chicago. During his presentation, he talked about how the Bank of Japan’s aggressive $1 billion annual stimulus program is creating a “wall of money” washing over the globe:

“The fear is that tapering will lead to mid-nineties-like collapse of emerging markets, we think that is wrong… The market has focused so much on the fed and fed tapering, it has ignored Japan’s aggressive stimulus.”

As for his $70 billion Templeton Global Bond Fund, Hasenstab has moved to the very short end of the yield curve and is looking for bonds in countries that can earn higher yields with little interest rate risk, saying that Hungary, Poland, Mexico and South Korea are among the countries poised to handle a pull back in US monetary stimulus.

Hasenstab’s fund is long in the dollar against currencies like the Euro and the Yen, but he thinks the dollar will decline against more “responsive” economies, like South Korea and Mexico. He also pointed out that the cushion of reserves available to emerging market governments is far higher than it was in the mid-nineties.

To read the whole article, Hasenstab’s Case For Emerging Markets, go to the website of WealthManagement.com.

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