Emerging Market Bond Funds Are Back In Vogue, Despite Inherent Risks
Emerging markets bonds were in focus late last week on considerable inflows in the largest ETF in the segment, EMB (iShares JPMorgan USD Emerging Markets Bond, Expense Ratio 0.60%, $7.9 billion in AUM).
EMB built on its already considerable asset base with more than $425 million in new assets that joined the fray last week thanks to creation flows, and the fund has steadily rallied to its pre-Trump election levels.
While EMB traded higher than a $115 handle just last September it is presently trading in the low $113’s and still has some work to do in order to recoup new highs (52 week high is $118.14).
The fund is more than two times larger than the next largest alternative in the “Emerging Markets Bond” space which is PCY (PowerShares Emerging Markets Sovereign Debt Portfolio, Expense Ratio 0.50%, $3.7 billion in AUM). PCY has not quite seen the appetite for new assets that EMB (over $547 million in YTD) has had in 2017, but it has attracted more than $45 million in its own right during this time frame.
EMLC (VanEck Vectors JPMorgan Emerging Markets Local Currency Bond, Expense Ratio 0.47%, $2.3 billion in AUM), which is the third largest fund in this segment, has also put together a strong 2017 thus far with $200 million in via creation flows. Some of the countries that are represented within the portfolio include Russia (#1 holding, 1.7%), Uruguay (1.03%), Hungary (0.93%), Peru (0.85%), and Argentina (0.84%) to name a few (there are three hundred thirty-nine individual bonds within the product currently).
The iShares JPMorgan USD Emer Mkt Bnd Fd ETF (NYSE:EMB) was trading at $113.10 per share on Monday morning, up $0.09 (+0.08%). Year-to-date, EMB has gained 2.61%, versus a 4.06% rise in the benchmark S&P 500 index during the same period.
EMB currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 22 ETFs in the Emerging Markets Bonds ETFs category.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
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