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lse:seml

#1

anybody have these?


#2

Yes, only a small amount as wanted to diversify away from risky developed currencies a bit. Performance somewhat disappointing but yield to maturity of 7%+ looks reasonable to me given maturity of around 7 years, especially when compared to yields on “safer” developed markets, and arguably much safer than the “unsafe” developed markets. Obviously there is currency risk but mid-long term there may be scope for currency appreciation given better outlook for many emerging markets when compard to developed markets. What’s your view?


#3

Yes, I have some. And I bought some more just before Christmas thinking they were looking attractive. Since then, they’ve slid again. There were some huge buys just after they were set up, but I suspect those purchases were by institutions.

There’s a double currency risk, isn’t there? Local currency and dollar. I thought the dollar had appreciated against the pound over recent months, which suggests the local currencies have fallen heavily against the dollar. Dissapointing.


#4

Taking a hammering here. Do we hold?


#5

These things are a bit of a swindle, really. They say the yield is 5%, or whatever, but when a dividend is paid the bid price falls by the amount of the pay out. So, whet they are doing, in fact, is merely giving you your money back.


#6

See http://uk.ishares.com/en/rc/products/SEML
Yield to maturity on underlying portfolio is 6.52% whereas distribution yield is 5.1% meaning that ignoring currency risk and credit risk the portfolio would give a capital gain if held to maturity. Therefore they are not giving you your money back. Your point about share price falling when dividend paid applies equally to all shares and other instruments except bonds trading at a clean price for which accrued interest is added to purchase / sale price.
Clearly performance has disappointed. This is due to currency and other impacts of US taper. Personally I think it worth drip purchasing these over a period of time but perhaps moving yo emerging mkt corporate bond funds as we’ll might be an idea?


#7

Yes, you’re right. There is, of course, more tapering to come and, eventually, higher interest rates. What effect do you think this will have on this fund. Clearly, if the price continues to fall, the yield will continue to rise, leaving currency changes aside.