“Currencies of oil exporters like Russia and Colombia have exhibited high correlations with oil prices over the past five years. The remaining 16 currencies generally experienced lower correlation, which is perhaps unsurprising given that over 60% of the index comprised net oil importers, as of January 31, 2018,” according to VanEck.
Bond investors may customize their credit risk exposure to emerging market debt through speculative high-yield options or more conservative investment-grade exposure, including the VanEck Vectors Emerging Markets High Yield Bond ETF (NYSEArca: HYEM), VanEck Vectors EM Investment Grade + BB Rated USD Sovereign Bond ETF (NYSEArca: IGEM) and VanEck Vectors Emerging Markets Aggregate Bond ETF (NYSEArca: EMAG).
“The overall moderate correlation of index returns with oil prices reflects the diversity of economies within the index. Despite rising commodity prices since 2016, the majority of emerging markets local currency bond returns over the past five years have been driven by local interest rates rather than currency appreciation,” according to VanEck.
For more information on fixed-income assets, visit our bond ETFs category.