DoubleLine Emerging Market Fixed Income Fund
Click to Enlarge With so much fear of the unknown in the markets, many investors feel more comfortable pulling their dollars back home to invest in familiar U.S. stock and bond names. Emerging-market fixed-income funds sold off precipitously as a result of a suspected slowdown in many EM countries, in addition to fears of high levels of inflation.
I prefer the DoubleLine Emerging Market Fixed Income Fund (DBLEX) strategy because it is highly concentrated in U.S. dollar-denominated, investment-grade, emerging-market corporate debt — and I believe that presents excellent risk/reward for income and capital appreciation over the next six months. The manager, Luz Padilla, favors quality exposure to quasi-sovereign companies that are classified as such because their business operation is vital to the host country’s economy.
In a comparison with the iShares Emerging Market Corporate Bond ETF (CEMB), you can see the approach has protected investors’ capital on the downside. I believe timely changes to the fund’s portfolio — to elongate the duration to capitalize on higher yields and lower price levels — could result in a great capital appreciation opportunity as markets stabilize.
Michael Fabian is Managing Partner and Chief Investment Officer of Fabian Capital Management. As of this writing, he was long OSTIX. To get more investor insights from Fabian Capital, visit their blog.