Build The Wall! Por Favor.

Trump’s incendiary tweets against Mexico are music to the ears of BlackRock’s intrepid emerging-market portfolio manager Gerardo Rodriguez.

 

- Kenneth Rapoza

Among Mexicans, few get as much pleasure from President Trump’s tough talk excoriating our southern neighbor as Gerardo Rodriguez, portfolio manager of BlackRock’s Total Emerging Markets Fund. Since January, Total has been seriously overweighting Mexican bonds, and the president’s rhetoric and tweets about “bad hombres,” building walls and dealing NAFTA a deathblow tend to send the peso falling. In January, during Trump’s first days in office, the peso’s exchange rate with the U.S. dollar peaked at nearly 22, its weakest level in history.

For Rodriguez, that moment was somewhat like the S&P 500 low in March 2009, after the financial crisis. Rodriguez knew it was a great time to buy Mexico, and he instructed BlackRock traders to pile into peso-denominated bonds when most investors were running for cover. At the time, Mexican government bonds were yielding 7.8%, compared with 2.3% for ten-year U.S. Treasurys. This move, plus a big allocation to beaten-down Asian stocks like Samsung and Ali baba, has helped Total Emerging Markets achieve a 10.4% total return year to date and a 4.2% three-year average annual return, topping its category and earning it five stars among Morningstar-rated funds.

“All of our analysis was flashing red hot in favor of Mexico in January. Trump’s aggressiveness didn’t frighten us away. When there’s a big move like that in Mexico, you go in,” Rodriguez says from his office on Park Avenue in New York, a colorful som brero hanging outside on the wall. Rodriguez just returned from 90-degree weather in Mexico City, but New York on this day was an unseasonable 55.