Investors who are interested in emerging market debt should make the distinction between USD and local currency denominated emerging market bond ETFs. With USD-denominated funds, investors would not benefit from strengthening emerging market currencies.

“Foreign currency appreciation furnished 60% of total returns of emerging market debt in the past eight years,” BlackRock said.

U.S. dollar denominated emerging market bond ETFs:

  • iShares JPMorgan USD Emerging Markets Bond Fund (NYSEArca: EMB)
  • PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY)

Local currency emerging market bond ETFs:

  • WisdomTree Emerging Markets Local Debt Fund (NYSEArca: ELD)
  • Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC)

For more information on ETF asset flows, visit our ETF performance report category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own DEM, EEM, and EMB.