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Wednesday, September 7, 2016

The Investment Upside of a Strong US Dollar

Given the steady rise of the US Dollar, local investors are now looking at US Dollar-denominated investments to help offset local volatility and achieve good returns.

Coinciding with market uncertainty associated with an election year, the Philippine Peso itself has been underperforming since mid-April. At present, the domestic currency is hovering around the P47:USD1 level, making its 1.9percent depreciation the third - highest in Asia after the Chinese Yuan’s 2.3 percent and Malaysian Ringgit’s 4 percent.

On the other hand, the United States Dollar has been steadily strengthening since 2013. The US Dollar Index, which measures the general value of the US Dollar against major world currencies, is up 19% during this period.

“Many of our investors are now studying how they canbenefit from a strong US Dollar,” explained PhilamLife Head of Fixed Income Securities Vince Daffon. “We’ve definitely seen an increase in our US Dollar-denominated PAMI Global Bond Fund and our Philam Dollar Bond Fund, for example,” he added. 

Daffon further noted that high quality US Dollar-denominatedsovereign and corporate bonds have performed well and remain attractive investments, due in part to a decline in US government bond yields.  “The ten year US Treasury yield began the year  at 2.27%, and  the 30 year US Treasury yield at 3.02%,” he pointed out. “At present, the 10-year and 30-year US Treasury yield are now trading at 1.55% and 2.30%, respectively.” Typically, lower US Treasury yields drive up bond prices and fund returns. “The PAMI Global Bond Fund has a minimum initial investment of USD5,000, while the Philam Dollar Bond Fund has a minimum investment of USD2,000. For investors looking to diversify their portfolios and take advantage of a strong US Dollar and bond market, I believe that these funds represent a solid value proposition,” Daffon concluded.

To learn more about the PAMI Global Bond Fund and the Philam Dollar Bond Fund please visit 

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