Bringing you live news and features since 2006 

Emerging markets sovereign bond ETFs are safe with attractive yields, says Zacks


With the US Treasury bonds now at ultra-low yield levels, investors are looking at alternate sources of income from their investment portfolios.

One asset class which has attracted a lot of investors’ interest recently is emerging markets debt, as it provides an opportunity to earn much higher yields with capital appreciation, while adding diversification benefits to the portfolio.

The case of investing in emerging markets sovereign debt seems to be pretty strong now. Many emerging countries now have better fiscal health and lower debt levels than their developed counterparts. Healthy emerging economies also have adequate levels of foreign exchange reserves and deep and liquid financial markets. Thus the chances of sovereign default are extremely low.

Further, while interest rates are at rock-bottom levels in the US and can only go up from the current levels, the rates in emerging countries are still high. The central banks in many of these countries were raising rates till last year but reversed the monetary cycle later last year or earlier this year, as the growth slowed and inflation came within their acceptable range.

“Investors looking for true diversification in their portfolios and higher longer-term return should consider investing in emerging markets local currency bond ETFs,” says Neena Mishra, CFA of Zacks Investment Research. “In addition to greater return potential in the long-term, these ETFs are less sensitive to interest rate changes compared with USD denominated debt ETFs due to their shorter duration (four to five years) compared with the duration of two USD denominated emerging market debt ETFs (seven to nine years).”

Latest News

US ETF issuers of active ETFs are facing an increase in fees from the big custodian firms, such as Charles..
ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by