“The Bloomberg Barclays index tracking emerging market bonds is up 4.3 percent this year, unhedged for currency, and a total of 28 percent for the last five years, more than double the gains for the Bloomberg Barclays U.S. Bond Aggregate Index,” reports CNBC.
The PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY), another dollar-denominated ETF, is another emerging markets bond ETF to consider. PCY is the second-largest dollar-denominated emerging markets bonds ETF behind EMB.
A U.S. dollar-denominated investment grade sovereign emerging market bond strategy may also help investors focus on higher quality assets and avoid the volatility associated with emerging market local currencies while gaining exposure to high credit quality.
EMB “has risen 5.4 percent this year, placing it eighth among the 19 passive funds in the segment, according to ETF Database. Its top 10 holdings are split between government bonds from Eastern European nations, like Russia and Hungary, and South American sovereign issuers such as Uruguay and Peru,” according to CNBC.
For more information on the fixed-income market, visit our bond ETFs category.
Tom Lydon’s clients own shares of EMB.