LEMB, on the other hand, tracks emerging market debt denominated in the respective local currencies, which may benefit investors if the U.S. dollar depreciates against those currencies. The fund has a 5.14% 30-day SEC yield and an effective duration of 4.08 years.
For instance, the South African rand appreciated 3.8%, Turkish lira gained 2.5%, Indonesian rupiah rose 4.9% and Mexican peso was up 1% in February.
The stronger currencies also bolstered country-specific ETFs like the e iShares MSCI Indonesia ETF (NYSEArca: EIDO) and the iShares MSCI South Africa ETF (NYSEArca: EZA), which gained 10.2% and 7.7%, respectively, over the month. The ETFs track company stocks denominated in the local currencies, so the stronger foreign currencies translates to a stronger return in USD terms. [Interest Increasing in Indonesia ETFs]
For more information on the bond market, visit our bond ETFs category.
Tom Lydon’s clients own shares of EMB.