Additionally, with the U.S. dollar in the early stages of a strengthening cycle, some investors are concerned about the ability of emerging market governments to service debts issued in USD – a stronger U.S. dollar means emerging countries would have dig deeper into their coffers to pay off a USD-denominated loan. M&G Investments has also warned that default rates are all but guaranteed to increase as the dollar strengthens. [A Strong USD Could Cause Problems for Emerging Bond ETFs]
Meanwhile, falling growth and rising political volatility in emerging countries, like Turkey, have weighed on asset prices. The recent bout of political volatility has sent the Turkish lira plunging against the U.S. dollar. [Turkey ETF Plunges on Political Uncertainty]
iShares J.P. Morgan USD Emerging Markets Bond ETF
For more information on the fixed-income market, visit our bond ETFs category.
Max Chen contributed to this article.