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.

Previous Fed rate hikes have triggered volatility in the emerging markets. While many emerging markets have garnered a bad reputation for experiencing spiraling debt defaults in face of rapid currency depreciation, the developing economies are more resilient in a weak commodities environment.

“Our long-term view on EM assets is positive. Key is improvement in our outlook for developed market growth. Our BlackRock GPS, which incorporates big data signals to provide a handle on the economic growth outlook, shows consensus growth forecasts are still too cautious. These improving fundamentals should eventually boost EM growth,” adds BlackRock.

For more information on the fixed-income market, visit our bond ETFs category.

Tom Lydon’s clients own shares of EMB.