Betting on Russian Bonds With ETFs

“Where to find potential value: The key thing when buying Russian debt is to look at the relationship of the issuer with the Russian government Larson believes. Given the degree of political management of the economy, investors are better off being closer to the government, so it could be better to buy a company that is government owned or has close government relations. In the corporate space, that could mean the bonds of companies that are strategically important to the Russian government or are state controlled,” according to a BNY Mellon note posted by Dimitra DeFotis of Barron’s.

The iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEArca: EMB) and the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY), the two largest emerging markets bond ETFs, also feature modest allocations to Russian debt.

Vanguard Emerging Markets Government Bond ETF

Tom Lydon’s clients own shares of EMB.