Choices For Emerging Market Bond ETFs

November 17, 2015

Dollar-Denominated Corporates

Stepping back into the dollar-denominated area, another option for investors is corporate debt versus sovereign debt. ETFs available to invest in corporate debt are:

To illustrate the corporate versus sovereign decision, here are some side-by-side comparisons of the different ETFs versus EMB:

While the yields are somewhat similar, there is a bit of a trade-off of accepting more spread risk in corporates while also getting a bit lower duration. Additionally, the top country exposure is more concentrated (similar to local currency sovereigns).

Conclusion

When looking to emerging market bonds as an alternative to U.S. or developed-market exposure, there are various ETFs to choose from. An investor just needs to decide what type of issuer exposure they are comfortable with, whether it is sovereign or corporate, and dollar versus local denominated.


At the time of writing, the author’s firm held no shares of any of the securities mentioned. The above constitutes the personal, professional opinion of Clayton Fresk, CFA, and does not reflect the views of Stadion Money Management LLC. References to specific securities or market indexes are not intended as specific investment advice. Founded in 1993, Stadion Money Management is a privately owned money management firm based near Athens, Georgia. Via its unique approach and suite of nontraditional strategies with a defensive bias, Stadion seeks to help investors—through advisors or retirement plans—protect and grow their “serious money.” Contact Stadion at 800-222-7636 or www.stadionmoney.com.

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