EM Bond Funds Poised to Outperform on Expected Fed Rate Cut
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Emerging-market bonds will outperform AI stocks when the Fed cuts rates, likely in June. A rate cut would weaken the US dollar, boosting EM bonds.
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Two closed-end funds to play this opportunity Western Asset Emerging Markets Debt Fund (EMD) and AllianceBernstein Global High Income Fund (AWF).
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EMD yields 10.9% but has lagged AWF's performance history. AWF yields less at 7.5% but has significantly outearned EMD over time.
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AWF has also held up better recently during rising rates. It does not use leverage like EMD.
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Both funds trade at discounts, presenting an opportunity. But AWF's discount has more room to narrow since it has traded at tighter levels.