When trading in the emerging market space, equity exchange traded funds (ETFs) are usually the go-to investment. However, the market for emerging market debt is steadily rising and may be a viable alternative to investing in emerging economies.
Fixed-income assets are legal, contractual obligations for the issuing entity to pay a creditor a stated rate of interest and the full principal invested over a specified time, which makes them less risky than equities, Katrina Lamb for Investopedia instructs.
Emerging markets offer a mix of sovereign, municipal, corporate and structured debt in either local currency issues or issues denominated in U.S. dollars or another developed currency.
If you want exposure to this space, you have a growing number of options.
Investors may access emerging market debt through the iShares JP Morgan USD Emerging Markets Bond Fund (NYSEArca: EMB) or the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY), writes Roger Nusbaum for TheStreet. Both EMB and PCY hold bonds denominated in U.S. dollars.