HYEM is not short on currently controversial nations. In addition to China, the ETF features a combined 11% weight to Russia and Ukraine. Last week, Moody’s put Russia’s sovereign debt rating on review for a possible downgrade. Brazil, which saw its sovereign rating lowered by Standard & Poor’s last week, is 7.1% of the fund’s weight while politically volatile Venezuela is 6.1%,” according to Market Vectors data.
That has not kept investors away. In fact, HYEM “attracted $97 million last week, the most since April 2013,” according to Bloomberg.
“There has been a lot of attention paid to recent corporate defaults in China,” said Rodilosso. “We expect to see more of these and accept it as a part of the rationalization of the local market and the normalization of the flow of capital. There is a long way to go, and those EM debt investors who want to avoid exposure to China may find ample opportunities elsewhere.”
Market Vectors Emerging Markets High Yield Bond ETF
