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VIX spiked 10 points in June – it is a good time to allocate to EM
Weekly investor research
11 July 2016
The Brexit vote caused a spike in the VIX index of more than 10 points in June. VIX spikes of this magnitude have in the past always been excellent entry points into EM with an average alpha of 3% in the following 12 months relative to a strategy of passively timed allocations. Moreover, flows into EM fixed income hit a new record last week. In the Global Backdrop section we explain why it does not matter so much who wins the next US presidential election – it is far more important who gets to control Congress. We outline some potential implications for EM.