Bond ETFs continue to see heavy buying as investors look for new fixed-income options and remain wary of stocks. Now, with all the traditionally conservative bond markets at full saturation, investors are branching out to other areas, adding emerging market debt exchange traded funds.
“Flows were particularly noticeable in emerging debt, which continues to be the beta of choice for investors in search of a risk-balanced approach to higher-yielding assets,” according to Credit Suisse, reports Hannah Collins for Risk.
A BlackRock industry report revealed that among exchange traded products launched in 2011, the WisdomTree Asia Local Debt Fund (NYSEArca: ALD) was the sixth largest by the first quarter of 2012.
Emerging market debt was once restricted to pensions and other institutional investors. Later, private banks and wealth managers have been able to get their hands on it, and now, the average investor may gain access through ETFs.
“Eventually, it should make its way into the retail space,” Eleanor Hope-Bell, head of intermediaries for the UK and Nordics at State Street Global Advisors, said in the article.
Additionally, there is growing interest in emerging market debt issued under their own local currencies. According to a State Street report, local currency emerging market debt had over $1.3 trillion at the end of 2010, up more than 50% since the start of 2009.