Recently we have seen decent sized inflows in the Emerging Markets bond space via the largest ETF in the segment, EMB (iShares JP Morgan USD Emerging Markets Bond, Expense Ratio 0.60%), which now has a lofty $5.08 billion in assets under management.
The fund debuted back in 2007, but it has really taken off in the past couple years as investor appetite for Emerging Market bond exposure has grown exponentially it seems.
EMB has taken in >$1.5 billion just year to date in fact in terms of net asset inflows, despite the fact that the fund is trading at new all-time highs lately (Yield 4.48%). We see exposure to countries including Russia, Poland, Peru, Panama, and Argentina as well as other “non-BRIC” emerging market countries, with about 252 individual bonds in the portfolio.
We find the fact that this and like ETFs in the EM Bond space continue to attract assets despite the recent run to new highs is something to keep an eye on in terms of the broader theme of “risk/reward” especially toward what are higher beta assets.
A few other notables in the EM Bond space that are not quite as large as EMB include PCY (PowerShares Emerging Markets Sovereign Debt Portfolio, Expense Ratio 0.50%, Yield 4.30%) which has taken in >$100 million in new assets YTD, making it a >$2 billion fund and the second largest in AUM terms in the category.