Investors who want to use exchange traded funds (ETFs) to gain access to emerging market bonds have limited choices open to them. This may be a signal for providers to supply a product to the marketplace.
Record levels are seen for the issuance of emerging market bonds – so far this year, $306.8b has been raised. This is the best start since comparable records started in the 1970s. Chris Flood for The Financial Times explains that there are more than 250 stock market-based emerging market ETFs to choose from, while the choice of emerging market bond ETFs globally is fewer than 20. [Fixed-Income: Still a Sound Strategy?]
The major roadblock that is keeping this region of the bond market off the map could be the lack of a suitable benchmark index to track. Meanwhile, banks remain timid to lend to companies, so they have turned to bond markets to raise capital. The $231.7 billion raised by the corporate sector this year accounts for 75.5 % of all emerging market bonds sold. [Grail Will Soon Provide an Emerging Market Bond ETF.]
For more stories about bonds, visit our bond category.
- iShares JPMorgan Emerging Markets Bond (NYSEArca: EMB)
- PowerShares Emerging Market Sovereign Debt (NYSEArca: PCY)
Tisha Guerrero contributed to this article.