ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
    • Crypto ETF Hub
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Fixed Income Channel
  2. Emerging Markets Bonds Create Value Opportunity
Fixed Income Channel
Share

Emerging Markets Bonds Create Value Opportunity

Ben HernandezOct 28, 2022
2022-10-28

Global inflation hasn’t been kind to emerging markets (EM) assets in general, which includes bonds. While picking a bottom in the bond market (or any market for that matter) is difficult, now could be an opportune time.

A combination of a rising dollar and global inflation has been decimating EM assets for most of 2022. As such, investors have been quick to yank their capital from EM-focused funds, including those focusing on bonds.

“It has been a tough year for emerging markets bonds. Investors pulled a record $70bn from funds investing in EM debt between January and the end of September — a period that included only seven weeks of net inflows,” reported the Financial Times.

“Those relentless outflows signal how badly markets have been battered in 2022, with the soaring US dollar and rising global interest rates sucking money out of EM assets,” the report added. “The question now is whether inflation and interest rates are near their peak, creating an opportunity for bond prices to rise again.”

This is where fixed income investors can get EM bond exposure at value-oriented prices. As opposed to diving into a vast universe of EM bonds to choose from, there are easier options that are also more cost-efficient.

Getting Diversified EM Exposure

One convenient way to get EM bond exposure with a focus on safer government bonds, exchange traded funds (ETFs) can offer that level of exposure. One fund to consider is the Vanguard Emerging Markets Government Bond Index Fund ETF Shares (VWOB A).

VWOB seeks to track the performance of a benchmark index that measures the investment return of U.S. dollar-denominated bonds issued by governments and government-related issuers in emerging market countries. The fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays USD Emerging Markets Government RIC Capped Index.

Getting exposure to EM debt comes at a 0.20% expense ratio for VWOB. For that, the fund comes with a 30-day SEC yield of almost 8% as of October 20.

The average duration for the fund’s holdings is around seven years, giving the fund intermediate-level exposure to help capture yield while also limiting duration risk. In terms of country allocations, the top three are comprised of Mexico, Saudi Arabia, and Indonesia.

To mitigate rate risk, the fund focuses mainly on short- and intermediate-term debt, especially in the current market. 30% is allocated to debt maturing in one to five years, while another 30% is allocated to debt maturing in five to 10 years.

For more news, information, and strategy, visit the Fixed Income Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X