This Emerging Market Bond Fund Has Nearly Doubled in Size This Year

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August 25, 2016 7:17am NYSE:EMB

As investors desperately seek out yield anywhere they can find it, the iShares JPMorgan USD Emerging Market Bond Fund ETF (NYSE:EMB) has become one of 2016’s biggest winners.


By the end of July, EMB saw its assets under management (AUM) balloon to $9.7 billion. 45% of those assets — $4.35 billion — entered the fund as net inflows in 2016 alone.

EMB was also the fifth most popular exchange traded fund in the month of July based on creations, which is the mechanism that allows ETFs to track their underlying indexes or constituents. According to ETF.com, EMB has also cracked the top ten year-to-date ETFs in terms of creations as well.

With a yield of nearly 5.5%, it’s easy to see why investors are flocking to this fund. That’s nearly triple the yield of the SPY, and more than double the yield of the TLT. Plus, EMB is far less volatile than equity instruments.

Taking a look under the hood, EMB actually offers debt exposure to over 30 different countries. Its biggest holdings include sovereign debt from Russia, The Philippines, and Turkey. Each of these countries’ bonds make up with 5% of the fund’s holdings. Bonds from Argentina, Colombia, Hungary, Indonesia, and Poland contribute 4% each.

Look for emerging market bond funds to continue to see big attention from investors throughout the rest of the year, with market expectations for a Fed rate hike so low.

EMB-2016-08-25

EMB closed at $117.27 on Wednesday, down $0.40 (-0.34%). The largest bond fund targeting emerging market government debt has risen nearly 11% year-to-date.


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