In an investor update, Citywire + rated Bezalel said despite popular belief that dollar liabilities have improved across the region, there are still plenty of pitfalls.
‘High yield and emerging markets look vulnerable if rate rises bring about a strong dollar. However much some market participants try to give the impression that EMs can ride out a strong dollar today, I don’t think that is right,’ Bezalel said.
‘I think emerging markets still have huge dollar liabilities and a rally in the dollar makes a lot of these emerging market areas somewhat vulnerable. They could come under pressure because they have been so strong. Highly leveraged corporates look vulnerable.’
Bezalel has 15% of the fund allocated to EMD and India makes up 8% of the fund, while Bezalel said Argentina had also provided good returns this year but he had taken profit there.
‘I think India is a compelling story and we continue to have a large weighting across sovereign and quasi sovereign. You are getting local currency and you are getting high single digit yields. We like some of the housing finance companies in India,’ Bezalel said.