Which bond you choose really depends on which countries you’re looking for exposure to.
EMB has 64 holdings and a 0.60% expense ratio. The top country weightings, according to the ETF Resume, are Brazil, Turkey, Mexico, Philippines, Indonesia, Venezuela and Colombia.
PCY, on the other hand, has 55 holdings and a o.50% expense ratio. Top countries include Uruguay, El Salvador, Russia, Turkey, Colombia, Indonesia and Poland.
A third option is the recently-launched Market Vectors Emerging Market Bond ETF (NYSEArca: EMLC), which provides access to bonds denominated in currencies of the issuing countries. EMLC includes country weightings from 3% to 10%. Brazil, Malaysia, Mexico, Poland, South Africa and Thailand each make up 10% while Indonesia and Turkey hold 8% weightings. EMLC has an expense ratio of 0.49%. According to Van Eck’s research, EMLC has a 0.76 correlation to U.S. equities and a 0.54 correlation to U.S. bonds.
For more information on international sovereign debt, visit our international Treasury bonds category.
Max Chen contributed to this article.