Emerging market local currency bond funds track bonds from foreign countries such as Brazil or Turkey and have a much higher yield than similar bonds from developed markets. Besides serious portfolio diversification, some argue that such funds are better than traditional U.S.-dollar-denominated emerging-markets debt at reflecting the economic climates in their countries. The higher credit quality in shorter durations has proven helpful than those overseas bond denominated n U.S. dollars, reports Prior. [ETF Trends for 2013: Bonds, Dividends, Emerging Market Debt]
ETF industry flops include the 130/30 strategy, where the fund is 130% long and 30% short while invested in the market. The target of these funds is to outperform ETFs that only buy equities, while risk-reduction is not a goal. Volatility-tracking ETFs and ETNs (exchange traded notes) give investors the ability to bet on increasing volatility within the stock market, measured by the VIX Volatility Index. As a group, this ETF category was down 18% in 2012.
PIMCO Total Return ETF
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own BOND.