Why investors should consider Brazilian and Turkish bonds

You may not have enjoyed 2016 but it was actually a decent year for investors. Perhaps surprisingly, Russia, Brazil and high yield top the performance rankings, which goes to show the wisdom of avoiding crowded trades.

The top three performing government bonds (in USD) were Brazil, Russia and South Africa, while the best-performing asset class in 2016 overall was high yield credit, with a return of 14.6% (again measured in dollars). As for global sovereign debt, which had returned 12.6% by mid-August, the full-year return was a meagre 1.5%. Only emerging market debt, at 11.7% in USD, offered a good return. Looking forward, while we believe investors should expect equities and real estate to deliver the best returns in 2017, these two asset classes will be penalised by their high volatility and high ...