Emerging market bond investors should analyze concentration risk or look under the hood of their funds to better understand how much of a particular investment they are exposed to.
When it comes to U.S. bond ETFs, investors may be attracted to the cheap valuations and wider yield premiums that these bonds offer over safe-haven government bonds after benchmark yields on 10-year Treasuries dipped back toward all-time lows.
Moreover, the rebound in energy prices could have reassured investor fears of a potential defaults in the energy space.
“Invesco favors buying in dollar-denominated bonds for the best combination of risk and returns, according to Tom Boccellari, a fixed-income and alternatives product strategist at the fund house. The Bloomberg USD Emerging Market Composite Bond Index has advanced 8.7 percent from a low on Jan. 20,” according to Bloomberg.
For more information on the Bonds ETF market, visit our Bonds category.
PowerShares Emerging Markets Sovereign Debt Portfolio