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Significant differences between now and 2008, says ETF manager Rodilosso


Worries about the Eurozone continue to accelerate, driven by uncertainty surrounding the financial health of Greece, Portugal, Italy, and now Spain. Market Vectors’ international high-yield corporate bond portfolio manager Fran Rodilosso though says there are key differences between what is taking place today and what the markets saw in 2008.

This is a comparison many are trying to make as volatility seems ready to return to mid-crisis levels.

“It does not make it any less painful, but worse news from Europe is anticipated by the markets. In my opinion, the financial system is perhaps set up to function better this time around,” says Rodilosso. “I believe there may be buyers of last resort more ready, willing and able than they were in 2008, when the world was caught off guard.

“The differences between today and the beginning of 2008 are many,” continued Rodilosso. “No doubt sovereign balance sheets among developed countries are in bad shape. But in many of those same countries, corporate balance sheets are no worse off or possibly even better. Consumer debt, while higher in peripheral Europe and France, is lower in the US, UK and Germany. Emerging markets sovereign and corporate balance sheets are still quite healthy.”

Rodilosso also notes that there are pools of capital forming in order to take advantage of asset sales, particularly in Europe. “Be it private equity and distressed funds, collateralized loan obligations or Chinese enterprises looking to expand abroad, there are buyers of assets at lower levels than current valuations,” he added. “Those levels might not please the banks or shareholders who are forced to sell, but I think the system is set up in a different way this time. Unfortunately, one of the main problems today is that sovereigns and central banks have fired so many bullets. They are less capable and less credible backstops themselves.”

Rodilosso joined the Market Vectors team earlier this year bringing with him more than 20 years of senior level experience in emerging market, high-yield debt research and portfolio management. He currently manages three Market Vectors high-yield corporate bond ETFs, Fallen Angel High Yield Bond ETF (NYSE Arca: ANGL), International High Yield Bond ETF (NYSE Arca: IHY) and the most recent addition to this fund family, Emerging Markets High Yield Bond ETF (NYSE Arca: HYEM).

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