Invesco's senior portfolio manager Kristina Campmany emphasizes the benefits of central bank policy divergence, particularly as the Federal Reserve and Bank of England maintain steady rates while other central banks, including the European Central Bank and the Bank of Japan, have raised rates.
This environment creates opportunities for cross-market trades, particularly through the Invesco Flexible Income ETF (FLXI), which has a 30-day yield of 4.93% and invests up to 40% in international assets. In comparison, U.S.-focused funds like the Vanguard Total Bond Market ETF (BND) and iShares Core U.S. Aggregate Bond ETF (AGG) offer lower yields at 4.65% and 4.68%, respectively.
Campmany notes that emerging markets, especially Brazil and South Africa, present significant value due to their higher base interest rates and recent rate cuts. The fund's holdings reflect this strategy, with 5.2% in South Africa and 1.5% in Brazil.
Additionally, Invesco is focusing on securitized products in the U.S. market, which are seen as having favorable valuations and being less sensitive to economic shifts caused by artificial intelligence advancements