CEW WisdomTree Emerging Currency Strategy Fund : Bullish and Bearish Analyst Opinions

The way to get into emerging markets is after they blow up, not before... I'm cautious about emerging markets when they're already performing well. Emerging market currencies (like the Mexican Peso, Brazilian Real, and Turkish Lira) have provided strong carry trade returns for several years. Historically, these trades are prone to sudden, devastating drawdowns. Entering now is picking up pennies in front of a steamroller; it is safer to wait for a systemic crisis to reset valuations before allocating capital. Avoid emerging market currency and debt carry trades as they are late in their cycle and highly vulnerable to a sudden macro shock. Emerging markets remain stable and continue to pay high yields, resulting in significant missed income for those sitting on the sidelines.

The author expects Asian emerging market currencies to strengthen or stabilize as their respective central banks are increasing support.

Short emerging market currencies based on reported market sentiment and positioning for further downside.

JPMorgan is reducing its bullish stance on emerging market currencies (EMFX) due to high uncertainty, suggesting a less favorable risk/reward outlook.