INVESTMENT FOCUS-Funds call emerging market currency turn again

viernes 4 de marzo de 2016 13:41 GYT

* Hopes for recovery on EM currency bonds after 3 years of losses

* Some funds such bet on double-digit returns

* But many wary of US recovery boosting dollar again

By Sujata Rao

LONDON, March 4 (Reuters) - After three years of negative returns in emerging market currencies and local bonds, and at least as many false dawns, some investors are punting again on a turning point - this time hopeful of a downturn in the dominant U.S. dollar.

Dollar-based investors suffered an average 15 percent losses last year on bonds denominated in currencies such as Turkish lira and Mexican peso, and sector funds tracked by the EPFR Global consultancy witnessed $12.6 billion in capital outflows - the third straight year of losses.

But some say that even if the outlook for emerging economies is precarious, local-currency bonds are now attractive.

Already this year, emerging currency debt has returned 4 percent in dollar terms, comparable to German and U.S. government bonds but well above most other mainstream asset classes, this chart shows:   Continuación...