On the other hand, local-currency debt have experienced greater swings than USD-denominated debt. [Asia Bond ETFs Seen as Vulnerable as Debt Rises]
“It’s clear that local-currency options are the most volatile way to invest in this asset class,” Anderson said. “Over the past five years through July 31, 2014, the typical local-currency fund experienced 1.4 times as much volatility (as measured by standard deviation) as the average hard-currency offering.”
Moreover, retail investors are now able to access emerging market corporate debt through dedicated emerging market ETFs, like the WisdomTree Emerging Markets Corporate Bond Fund (NasdaqGM: EMCB). EMCB, like other corporate bond fund offerings, tend to track USD-denominated due to legal restrictions and poor custody arrangements in the local markets.
Lastly, investors can choose from fund that have a mix of debt options. The Market Vectors Emerging Markets Aggregate Bond ETF (NYSEArca: EMAG) follows sovereign and corporate debt denominated in USD, euros and local emerging market currencies.
For more information on the fixed-income market, visit our bond ETFs category.
Max Chen contributed to this article.