Even if corporates defaults rise in earnest, EMCB may be able to remain sturdy because the bulk of its holdings are quasi-sovereigns, or bonds issued by state-run enterprises. It is just one example and it is far from the best oil stock, but the chances of the Brazilian government allowing Petrobras (NYSE: PBR) to default on its debt are minimal because that would likely impact Brazil’s sovereign rating. Petrobras is an EMCB holding.
That does not mean EMCB is free of risk, but when the emerging markets calamity passes, the ETF’s recent sturdiness shows it might be one of the bond funds to scoop up when more docile times arrive for developing nations.
WisdomTree Emerging Markets Corporate Bond Fund
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EMB and LQD.