With attractive growth prospects and improving credit in the developing world, emerging market sovereign debt related exchange traded funds have garnered a lot of attention as investors seek yield generating assets.

Overall, emerging market funds attracted $1.7 billion in assets over the past week, up from $1.1 billion the previous week, with bond inflows hitting a 35-week high, reports Erin McCarthy for the Wall Street Journal. [Emerging Markets Bond ETF Rakes in $400 Million]

Emerging market bond funds denominated in major currencies, like the U.S. dollar, brought in $966 million. Local-currency bond funds, which are denominated in the issuing country’s local currency, saw their highest inflows in over a year, adding $673 million in assets, according to EPFR Global.

“Emerging markets are starting to look relatively good again because their growth rates are that bit higher, and a lot of them have that bit more room to do something to help their economies,” Cameron Brandt, EPFR director of research, said in the article.

With benchmark 10-year Treasury yields hovering around 1.65%, investors have included more emerging market bond assets. Luz Padilla, a portfolio manager for the DoubleLine emerging markets fixed- income fund, even believes investors are considering emerging market bonds as a “true substitute” for investment-grade bonds, Reuters reports.

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