Exploring the Upside in Emerging Market Bond ETFs

Factors like U.S. rates, growth and inflation, EU and Japanese monetary policies could all potentially weigh in the emerging market outlook. While emerging markets bonds can be a tricky asset class to navigate, data suggest passive management works.

“EMB has outperformed more than half of the active mutual funds over longer time frames. EMB is a market capitalization-weighted index fund. In this illiquid, high-transaction-cost market, fewer than half of the active mutual funds in the U.S. have been able to beat EMB since its inception nine-plus years ago,” according to BlackRock.

EMB has an effective duration of just under seven years and a 30-day SEC yield of 4.6%. None of the ETF’s geographic weights account for more than 6.2% of EMB’s roster. The top four country holdings are Mexico, Indonesia, Turkey and Russia. EMB’s holdings have a weighted average maturity of 10.75 years, according to issuer data.

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

Tom Lydon’s clients own shares of EMB.