Consequently, ETF investors who are interested in gaining exposure to emerging market debt can look to both USD-denominated or local currency-denominated bond strategies, such as the iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: EMB), which provides a direct play to a diversified portfolio of U.S. dollar-denominated emerging market bonds, and the iShares J.P. Morgan EM Local Currency Bond ETF (NYSEArca: LEMB), which is comprised of local currency-denominated emerging market bonds.
“We see both as attractive sources of income and are overweight EM equities,” the strategists added.
Furthermore, emerging market assets in general typically do better when emerging currencies are appreciating or the U.S. dollar weakens.
ETF investors have also been diving into the emerging equity markets through ETF options like the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG). IEMG has been the most popular ETF play so far this year, attracting $4.7 billion in net inflows year-to-date, according to XTF data.
For more information on the developing economies, visit our emerging markets category.