The New Future EconomiesSM MarketSafe® CD

Editor’s note: The following piece is an advertorial.

I received a number of emails from readers about my last contribution to the Sunday edition of the Daily Pfennig® newsletter, Emerging Opportunities: Low-Debt Economies Deserve A Look, which appeared March 29. Many of you wanted to discuss the advantages/disadvantages of debt, or the lack thereof. But, others asked the question, “What is the best way to invest in these emerging market currencies?”

If you glance at the EverBank® World Markets® product pages on the website, you won’t see the Indonesian rupiah or Turkish lira in the list of currencies EverBank offers. And, while you can purchase a few other emerging market currencies in the form of our WorldCurrency® CDs or Access accounts, these emerging markets can be some of the most volatile and can, therefore, subject holders to some wild swings in the valuation of their accounts.

As I wrote a couple of weeks ago, in my opinion, these emerging markets may also present some of the best opportunities. So, EverBank has put six of these emerging market currencies together into the newest MarketSafe CD.1 I think this could be one of the best ways for investors to put money into these volatile markets, as you may receive a potential upside payment without any risk to your principal.2

And, EverBank has brought back a very popular feature of past MarketSafe issues – the ‘jump note’ that guarantees a 10% minimum upside payment at maturity if the currency index outperforms the dollar.3 I will explain the structure of this latest offering in more detail at the end of today’s Daily Pfennig® newsletter; but first, let me review why I feel these emerging market currencies may offer a great opportunity for investors right now.

Making A Case For The Emerging Markets
I won’t rehash all of the information I presented a few weeks ago, but encourage readers who missed that Daily Pfennig® newsletter to take a look at One of the main points I was trying to convey was that many of the emerging markets are actually in ‘better’ shape with regard to debt levels than some more advanced economies. And, according to some industry experts, these emerging economies are also expected to grow at a faster rate; expectations that are supported by historical data showing the emerging markets have grown at nearly double the rate of advanced economies since the new millennium.4

But, another reason many believe the emerging markets hold such great potential is the emergence of a middle class in many of these countries. McKinsey Global Institute estimates that, “…by 2025, more than half of the world’s population will have joined the consuming classes, driving annual consumption in emerging markets to $30 trillion.”5 McKinsey goes on to add that the rise of the middle class in emerging markets will have an economic force that’s perhaps 1,000 times bigger than the Industrial Revolution in the 18th century.

Source: EverBank Research Team from analysis of data from International Monetary Fund.

Thanks to this new middle class, emerging markets already account for more than half of the world’s gross domestic production (GDP) on the basis of purchasing power.6 And, as shown on the accompanying chart, emerging markets’ GDP will continue to grow on average twice as fast as that of developed markets, accounting for 74% of global GDP7growth through the end of 2016. To put that into perspective, in 1990, they accounted for less than a third of global growth.8 Since these countries are grabbing a higher share of the global economy, it could make sense to add some exposure to their currencies in your portfolios.

In the emerging markets arena, EverBank identified six currencies that may offer excellent potential. These are currencies from countries that could become global powers in the near future, specifically, the currencies from China, Brazil, India, Turkey, Indonesia and Mexico.

Some of these countries also have a geographical position that gives them a competitive advantage in global trade. For example, Mexico is next door to the U.S., but also Latin America. Indonesia is in the heart of Southeast Asia, but also has deep connections with China. And Turkey has access to both the West and East, including strong trade links with countries in the Middle East, Europe and Asia.

Is Now The Time To Act?
Aside from having good prospects for long-term growth, these countries have something else in common: they’ve all been through some short-term challenges. The U.S. dollar has been on a rally, and the emerging market currencies have been especially hard hit during the last few years.

Readers of the Daily Pfennig® newsletter know that some of the best opportunities appear when there is, as I like to say, “blood in the streets.” Given this recent decline, now may be a good time to invest in these currencies. In many occasions, the best time to buy an asset is when nobody wants to buy it. That’s the situation we have today with these six currencies.

With the exception of the Chinese yuan, they’ve all collapsed in recent years. Market sentiment towards these currencies couldn’t be worse. For that reason, I think there is an opportunity for significant currency appreciation in the next few years. When it comes to these currencies, most people are fearful. For that reason, it may be time to “get greedy.”

Another important point to consider is that the recent dollar strength could soon come to an end. The U.S. dollar has jumped 25% since May 2014, which is a huge move for a currency.9 And, as I mentioned earlier, the MarketSafe structure is a way to gain exposure as it protects investors against any downside risk.

Details Of EverBank’s Newest MarketSafe Offering
Like all MarketSafe CDs, the new Future EconomiesSM CD is an indexed, U.S. dollar-denominated deposit product. This CD, which offers 100% deposited principal protection,2 is a limited time opportunity that brings you access to the upside potential of six emerging market currencies: the Brazilian real, Chinese renminbi, Indian rupee, Indonesian rupiah, Mexican peso, and Turkish lira.2 It will have a 5-year term and will use the semi-annual average pricing model that some of our previous MarketSafe CDs employed.

And, as I mentioned earlier, what’s most exciting about this newest CD is the “jump-note” structure that guarantees a 10% minimum upside payment at maturity if the currency index outperforms the dollar. What this means is if the average currency return is positive, investors are guaranteed to receive their original principal deposit plus 10%. And, if the average currency return is above 10%, then investors will receive their original principal deposit plus the currency return with no limit on potential upside.

As with all MarketSafe CDs, should the overall performance be negative, you’ll get your principal back: this is 100% principal protection. And, this CD does not pay a periodic rate of interest or annual percentage yield. All the disclosures, the Terms & Conditions, and anything pertinent to this CD, including the term sheet, can be found at, or EverBank can send them to you, if requested.

This CD comes at a time when the U.S. dollar is hot and the currency upside potential is strong. Open and fund your CD by May 7, 2015, to secure your spot in this innovative financial growth opportunity.

Until the next Daily Pfennig® edition…

Chris Gaffney, CFA
EverBank World Markets, a division of EverBank