Home etftrends.com Upside in EM Bonds Could Be Challenged by Inclement Weather

Upside in EM Bonds Could Be Challenged by Inclement Weather

“The periodic weather pattern that is currently forming in the Pacific Ocean typically results in hotter, drier conditions and therefore higher food prices in affected nations, giving policymakers more reason to keep pushing up borrowing costs,” the report added.

This presents a push-pull for investor sentiment, but it doesn’t mean they should stay away from EM debt completely. An active management strategy could be of benefit.

Easy Ingress to EM Debt

Prospective investors looking to get EM debt exposure have a plethora of options, but exchange traded funds (ETFs) provide for easy ingress in a dynamic investment vehicle. Furthermore, active management can add even more pliability when navigating the intricate EM debt market.

As EM debt continues to see more upside, consider the American Century Emerging Markets Bond ETF (AEMB). The fund uses active management to deliver high levels of income and attractive risk-adjusted returns over a full market cycle with a relatively low 0.39% expense ratio.

For yield seekers, AEMB features a 30-day unsubsidized yield of about 7.16%, as of June 30. Its 12-month distribution rate is 5.70, which should appease monthly income seekers.

With regard to its holdings (almost 140), investors will see a mix of debt in corporate, sovereign, and quasi-sovereign. This gives AEMB a dose of diversification while simultaneously maximizing yield.

Salient characteristics of AEMB on its product website:

  • Dynamically invests in a broad range of emerging markets debt securities, without limitations on credit quality.
  • Emphasizes hard currency (USD) sovereigns and quasi-sovereigns, as well as emerging markets corporate debt.

For more news, information, and strategy, visit the Core Strategies Channel.

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