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So the struggling global economy the election that looming fiscal cliff -- is telling you about.
What giving investors with a lot to consider so where investors parking their money that help -- global head of editorial it index universe is following hot money and joins us now with some answers some welcome.
Thanks glad to be here I think -- -- previous -- right after that say hey you know junk bonds this is the where a lot of investors are going and I know that you see the same trend going.
Yeah it's been amazing we've seen more than seven billion dollars flowing to junk bond ETFs this year about a billion and a half in the last month alone.
You know it starts to get him to be very crowded trade I think the right yields are still there there's still interstate -- and -- is that on our side.
Yet exactly right which those still looks good compared to the thirty year treasury but.
You have a lot of money flowing in you had vanguard actually telling people to stay away from their junk bond mutual fund it starts to be concerning at some point.
OK -- at what yields.
Do you looking yields when you bail on -- -- as you mentioned that it could get crowded or is already becoming crowded.
And possibly you point out -- there's always the risk of weakening corporate earnings.
That's right remember there's -- in the word of junk bonds -- -- re labeled them high yield but that's just.
That's it just -- -- over right.
You know right now the spreads against the thirty year look pretty decent I don't think the trade is over I just think it's long in the tooth you know as you see these.
Grab headline after headline as you see these become too that the two biggest jump on ETFs -- to the top twenty ETFs in the world right now.
You just start to worry that it's coming to an end it's probably not there yet okay -- but you have to keep close silent.
Let's move it along to talk about emerging markets because a lot of money is going there as well despite as you point out.
Its underperforming the S&P 500 lot of these ETFs.
That that's absolutely right you're seeing two trends and emerging market flows first.
One -- huge inflows into emerging market equities the number one ETF this year in terms of flows.
Is VWO which is a broad based emerging market equity portfolio and the fact that it's pulled in more than nine billion dollars.
Despite losing to the S&P 500 I think is telling the other bid which is -- -- -- is emerging market debt.
There's been huge inflows a billion and a half into dollar denominated emerging market debt.
Which is an asset class that no one really even knew existed two years ago so that's become a very popular investment as well.
You know we're putting all of this against the backdrop of the ETF tool.
But if you just look across asset class spectrum isn't it amazing how much interest and investment they're still listening US equities.
That's that's the most stunning thing of all perhaps right 38 billion dollars just flowing into plain Vanilla US equities.
As you said at the start of this were facing the fiscal cliff were facing the election we have all these risks.
And yet the market's doing pretty well investors keep plowing money into the S&P 500 into the -- use.
In this sector ET -- US equities are on their pace for I think one of the top two years and ETF inflows ever.
Despite all the negative news it's a little bit of the best house in a bad neighborhood -- -- -- -- he's not -- I don't wanna get share your your top secret investment ideas what are we missing you know look at the -- for me a little bit.
Ha -- I -- I mention emerging market local dollar denominated debt.
Which I think is one of the best ideas the dollar's extraordinary strong.
The balance sheets in those countries are extraordinarily strong it's time for investors to divert so -- diversify their bond portfolio away from the US market.
Into some of this dollar denominated emerging market debt.
So much great information thank you so much -- -- have a great --
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