Opportunities Abound in High-Yield Emerging Markets Debt

While emerging markets have been roiled by ongoing trade wars this year, there are still opportunities abound for investors seeking value and one of those areas is within emerging markets debt through the VanEck Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC).

The rough year in emerging market is evident in ETFs, such as the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO)–down 7.67% YTD, iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG)–down 7.3% YTD and iShares MSCI Emerging Markets ETF (NYSEArca: EEM)–down 7.78% YTD.

However, investors who are hesitant by the red prices in emerging markets ETF should view them as substantial markdowns, especially the U.S. and China settle their trade differences. This week, markets got a boost after Canada successfully agreed to revamp the North American Free Trade Agreement with the U.S. and Mexico, giving hope to emerging markets that trade wars can be further averted.

With respect to value compared to price, many of these ETFs from abroad present a profitable opportunity that can be realized, especially if China and the U.S. eventually ameliorate their trade differences by year’s end. It presents an interesting opportunity for the investor who is seeking value in terms of locating discounted assets such as those in emerging markets debt in EMLC.

“We’re seeing some pretty significant inflows back into EM local,” William Sokol, ETF Product Manager at VanEck, told ETF Trends. “It’s obviously been a tough year, but for a variety of reasons, we have investors coming back into this space.”