6/19/2017 Forbes India
Among Mexicans, few get as much pleasure from US President Trump’s tough talk excoriating our southern neighbour as Gerardo Rodriguez, portfolio manager of BlackRock’s Total Emerging Markets Fund.
Since January, Total has been seriously overweighting Mexican bonds, and the president’s rhetoric and tweets about “bad hombres”, building walls and dealing NAFTA a death blow tend to send the peso falling. In January, during Trump’s first days in office, the peso’s exchange rate with the US dollar peaked at nearly 22, its weakest level in history.
For Rodriguez, that moment was somewhat like the S&P 500 low in March 2009, after the financial crisis. Rodriguez knew it was a great time to buy Mexico, and he instructed BlackRock traders to pile into peso-denominated bonds when most investors were running for cover. At the time, Mexican government bonds were yielding 7.8 percent, compared with 2.3 percent for ten-year US Treasurys. This move, plus a big allocation to beaten-down Asian stocks like Samsung and Alibaba, has helped Total Emerging Markets achieve a 10.4 percent total return year to date and a 4.2 percent three-year average annual return, topping its category and earning it five stars among Morningstar-rated funds.