BlackRock's Rieder Says Europe, Japan Offer Best Opportunities

  • Central bank stimulus makes economies enticing, investor says
  • Fixed-income CIO also likes sovereigns from Mexico, Indonesia

Rick Rieder, chief investment officer of fundamental fixed income at BlackRock Inc., said Europe and Japan present the best investment opportunities because central bank policy will be very aggressive.

BlackRock has much of its investment risk in Europe and likes the continent’s peripheral countries, Rieder said Thursday at the CFA Institute’s fixed-income management conference in Boston. Still, he said, it is difficult to create persistent economic growth there or in Japan because of aging demographics.

The European Central Bank and Bank of Japan have been trying to stimulate economic expansion through so-called quantitative easing. The ECB in March started a 1.1 trillion ($1.2 trillion) euro government bond-buying program. The bank might add more stimulus this year with options including further reducing a deposit rate already at record lows, President Mario Draghi said today.

“The degree of monetary-policy accommodation will need to be reviewed at our December meeting when new macroeconomic projections will be available,” he told a news conference.

Mexico, Indonesia

BlackRock, the world’s biggest money manager, is also finding opportunities among emerging-market sovereign debt, particularly from Mexico and Indonesia. Rieder called the fundamentals in Mexico “quite good” despite concerns about inflation and fiscal deficits. Mexico is one of cheapest parts of world today in terms of currency and debt, according to Rieder, who said BlackRock has relatively small positions there.

He also expressed interest in Brazil.

“Brazil is going to be the trade of the year, I am convinced -- I just don’t know what year that will be," Rieder said. The country “has an amazingly good balance sheet” but is a “disaster” in every other area.

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