With interested rates expect to remain lower in the developed world and perhaps decline further, some strategists see emerging markets sovereign debt as a prime destination of income-starved investors.
EMB tracks the J.P. Morgan EMBI Global Core Index, a market-cap-weighted index. Potential investors should note that since it is a cap-weighted index, countries with greater debt will have a larger position in the portfolio. EMB is now the largest emerging markets debt fund in the world, ETF or otherwise.
“More U.S. growth typically means a stronger dollar, which is a significant problem for emerging-market nonbank borrowers, which have accumulated more than $3 trillion in dollar-denominated debt, according to Bank for International Settlements data. The higher the dollar rises, the more expensive it becomes to pay back the debt,” reports Bloomberg.
For more information on the fixed-income market, visit our bond ETFs category.
iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEArca: EMB)
Tom Lydon’s clients own shares of EMB.