Political Risk Looms For EM Bond ETFs

Brazil and Mexico, Latin America’s two largest economies, combine for 10% of EMB’s weight. Mexico is the ETF’s largest country weight at 6.16%. EMB has a 30-day SEC yield of 4.48% and an effective duration of 7.31 years.

“If history is anything to go by, traders need to start getting their act together. A report published by Citigroup Inc. earlier this month that detailed the election risks over the next 18 months in 20 countries concluded that elections have played a crucial role in the timing of ‘things going wrong’ in emerging markets,” according to Bloomberg.

Colombia, Indonesia, Malaysia and South Africa are among the emerging markets holding elections next year. Those countries combine for about 14% of EMB’s roster.

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