The rules-based indexing methodology integrates factor-based screens to diminish risks many are wary of with emerging market exposure. The underlying index starts out by selecting securities taken from the J.P. Morgan Emerging Market Bond Index Global Diversified and applies a proprietary methodology to filter for liquidity, for country risk and allocates risk based on credit rating.
Through this alternative weighting approach, the index seeks to provide better risk-adjusted returns compared to traditional market cap-weighted indexing and to potentially generate a competitive yield with lower levels of duration for investors.
JPMB’s credit quality breakdown includes investment-grade AAA 0.%, A 7.4% and BBB 27.7%, along with speculative-grade BB 29.5%, B 32.4% and CCC or lower 2.3%.
Financial advisors who want to learning more about the EM debt market can register for the Tuesday, April 24 webcast here.