Are Emerging-Markets Bonds Overheating? (NYSEARCA:ELD, NYSEARCA:PCY)

November 13, 2012 12:12pm NYSE:ELD

Flows have been high into developing-markets debt ETFs as investors seek more yield, but several funds are apt to manage the credit risks. This is not a new story, but the basic premise is the idea that the emerging world has very low debt/GDP ratios, their


economies have very low debt levels in relation to their GDP, and their GDP growth rates are much higher than developed world. So, if you are looking at who is the better credit risk, a country with low debts and high growth rates or a country like the U.S. or some of the countries in Europe with very high debt rates and very low GDP growth. Well, it’s obvious you will then chose emerging world. So that’s really the main story.

Now, the reason that there have still been higher yields and you still can get higher yields in the emerging world versus say very low yields in the U.S. and Europe, is that there is still risk of default because some of these governments are not as stable as the developed world, so that risk is still out there. But in general they are very good credit risks right now.

You can see the full Morningstar interview below:


Related: WisdomTree Trust (NYSEARCA:ELD), PowerShares Emerging Markets Sovere (NYSEARCA:PCY)


Read Next


Recommended for You

Partner Center


Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

ETF Screener

Find the perfect ETF for you with our screener. Search by asset class, country, and much more.

Go to ETF Screener

ETF News

We cover all the relevant news regarding the ETF industry, including new issues, big gainers, and more.

View All ETF News