While many are still wary of the current international environment, especially with increasing trade disputes, the strength in the U.S. dollar and rising interest rates are a bigger headwind. Nevertheless, BlackRock argued that potential investors should look to USD-denominated EM debt to diminish risks.
“In fixed income we prefer selected hard-currency EM debt. It provides some insulation against currency declines and looks relatively cheap versus local-currency debt,” according to a recent BlackRock note.
Along with EMB, fixed-income investors can look to options like the Invesco Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY) and JPMorgan USD Emerging Markets Sovereign Bond ETF (NYSEArcaL: JPMB) to gain exposure to dollar-denominated emerging market debt.
For more information on fixed-income assets, visit our bond ETFs category.