3 regions where you can get bang for your investing buck

If there is one thing investors have learned from this current economic cycle, it's that one size definitely does not fit all. Central banks are responding to individual economies, all of which are moving at different paces and at different times. This explains, in part, why Reserve Bank Governor Michele Bullock is so adamant that Australia will not see any rate relief this year - nor does the RBA have a scenario for a 50 basis point rate cut so far.

This reality is also upsetting the conventional wisdom for credit investors, like John Stover, Portfolio Manager for the Tribeca Asia Credit Strategy. Once upon a time, emerging market economies have had higher rates and far higher inflation than their developed market counterparts. But that's not the case this time.

"This time around, US inflation is actually higher [than Asian EM inflation]. But if you look at our portfolio, we invest in over 90% US Dollar bonds so from that perspective, we are more exposed to the US rate hike and rate cut environment. We also invest in over 95% fixed coupon bonds, so when the US starts cutting rates, that's a big tailwind for us," Stover told me.

Equally unusual is the default cycle. Traditionally, Asian emerging market companies have a chequered history when it comes to bankruptcies and refinancing. If you need any proof of that, ask Stover about his profitable trade shorting Chinese property developer bonds. But this time, the Asian EM default cycle has likely preceded the developed market default cycle - and that's good news for investors.

"In Asia, we have already gone through that difficult environment ... you're likely to see defaults move lower in this part of the cycle and even in a US recession," Stover said.

In this edition of The Pitch, Stover sits down with me to discuss all of the above concerning Asian credit investments. Plus, he'll tell us about his investment process for finding long and short credit ideas and where he is finding the biggest rewards for the lowest risk today.