EEmerging Markets (EM) had a tough exit amid the pandemic, rising US dollar, global inflation and now Russia’s invasion of Ukraine. However, if emerging markets come back strong, their bonds could also get a boost.
The MSCI Emerging Markets Index is down 11% in 2022 and 16% over the past year. DoubleLine Capital CEO Jeff Gundlach, also known as the “Bond King”, views emerging market stocks as an undervalued option.
“I recommend that investors invest on average in US equities and emerging market equities,” Gundlach said. “It’s a way of resculpting portfolios that will benefit from current trends.”
Stocks and bonds have been moving in tandem lately, but the latter have seen more activity as investors reduce their risk amid market uncertainty. It could also have a ripple effect for bonds outside safe US boundaries, opening investors up to potentially higher yield with emerging market bonds.
Get exposure to emerging bonds
Investors don’t have to search the entire universe of emerging market bonds available in the global debt market. They can get it all in one fund: the ETF Global X Emerging Markets Bond ETF (EMBD).
EMBD is an actively managed fund sub-advised by Mirae Asset Global Investments (USA) LLC that seeks a high level of total return, consisting of both income and capital appreciation, by investing in emerging market debt. EMBD primarily invests in emerging market debt securities denominated in US dollars, but the Fund may also invest in those denominated in applicable local currencies.
Securities may include fixed rate and floating rate debt securities issued by sovereign, quasi-sovereign and corporate entities of emerging countries. This adds a touch of diversification to an investor’s core bond portfolio.
EMBD offers investors:
- Experienced portfolio managers: EMBD’s portfolio managers have extensive experience in active emerging market debt management strategies.
- Cost competitive: With a total expense ratio of 0.39%, EMBD offers the outperformance potential and risk management of active portfolio managers, at a competitive cost.
- High Yield Potential: By targeting emerging market debt securities, EMBD aims to offer high yields with low correlations to other fixed income securities.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.