Low U.S. Treasury yields and a desire to diversify their bond portfolios have pushed investors to exchange traded funds that track emerging market corporate debt.

“People are still underallocated to other parts of emerging markets outside of the sovereign-credit universe,” Fran Rodilosso, portfolio manager for Market Vectors ETFs, which launched its Emerging Markets High Yield Bond ETF in May, said in a recent Wall Street Journal report.

The ETF vehicle has allowed exposure to many asset classes that were previously difficult to access for individual investors. ETFs have allowed seamless, cost-effective exposure to specific areas of the bond market, and provided superior liquidity. Companies in emerging markets have bonds that have much more room to run up and on average, most international investors prefer to purchase sovereign debt, reports The WSJ. [Six Emerging Market Bond ETFs with Attractive Yields]

Emerging market bonds offer higher yields than those in the U.S. and emerging market companies have lower debt levels, and the ability to pay off debt compared to U.S. corporations. [Finding the Best ETFs for Emerging Market Bonds]

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