As the U.S. market slowly wanders towards the road to recovery, many investors who had avoided the short term effects of the recession are now left scratching their heads, looking for a long term solution for slow American economic growth without risking everything. One option is to look through emerging market bonds, which often offer growth potential unparalleled in the U.S., without the risk of emerging equities.
The Pro member download from the Emerging Markets Bonds ETFdb Category page can be used to highlight the Emerging Markets Bonds ETFs with the lowest expenses, highest dividend yields, and best historical performance [see a sample Excel download here; get access to unlimited download capabilities with a free ETFdb Pro trial].Cheapest Emerging Markets Bonds ETFs
Some funds charge as little as 39 basis points while others have expense ratios of up to .65% annually.
|Number of ETFs||14|
|ER Range||0.39% to 0.65%|
|Total Assets||$14 billion|
|As of 1/16/13|
The cheapest Emerging Markets Bond ETF is the Market Vectors Renminbi Bond ETF (CHLC) at 0.39%, followed by the Chinese Yuan Dim Sum Bond Portfolio (DSUM) at 0.45%.
[Use the free ETF Screener to filter ETFs by sector and region exposure, as well as expenses and volume]Commission Free Emerging Markets Bonds ETFsEmerging Market ETFs Debut
There are five ETFs in the Emerging Markets Bonds ETFdb Category that are eligible for commission free trading, including:
- Asia Local Debt Fund (ALD): E*TRADE
- Emerging Markets Local Debt Fund (ELD): E*TRADE
- JP Morgan Emerging Markets Bond Fund (EMB): Fidelity
- Emerging Markets Corporate Bond Fund (EMCB): E*TRADE
- Emerging Markets Sovereign Debt Portfolio (PCY): TD Ameritrade
On an average day, the ETFs in the Emerging Markets Bonds ETFdb Category trade more than two million shares. The most heavily traded ETF in this category is often between the Emerging Markets Sovereign Debt Portfolio (PCY) and the USD Emerging Markets Bond Fund (EMB); both trade an average of 870,000 shares a day.
|Liquidity||Emerging Markets Sovereign Debt Portfolio (PCY)||A+|
|Expenses||Market Vectors Renminbi Bond ETF (CHLC)||A+|
|Performance||Emerging Markets Sovereign Debt Portfolio (PCY)||A+|
|Volatility||Chinese Yuan Dim Sum Bond Portfolio (DSUM)||A+|
|Dividend||LatAm Aggregate Bond ETF (BONO)||A+|
|Concentration||SPDR Barclays Capital Emerging Markets Local Bond ETF (EBND)||A+|
[Get access to Realtime Ratings for 1,400+ ETFs with a free 7-day trial to ETFdb Pro]Best Performing Emerging Markets Bonds ETFs
The performance of Emerging Markets Bonds ETFs is all over the board, especially during the last year. As of January 10th, the best performing Emerging Markets Bonds ETFs are as follows:
|1 Year||Emerging Markets Sovereign Debt Portfolio (PCY)||+21.62%|
|3 Years||Emerging Markets Sovereign Debt Portfolio (PCY)||+44.14%|
|5 Years||Emerging Markets Sovereign Debt Portfolio (PCY)||+62.64%|
|As of 1/10/13|
Emerging Markets Bonds ETFs aren’t generally known for high dividend payouts, but some products in this ETFdb Category have meaningful dividend yields:
- LatAm Aggregate Bond ETF (BONO): 4.83%
- Emerging Markets Sovereign Debt Portfolio (PCY): 4.62%
- SPDR Barclays Captal Emerging Markets Local Bond ETF (EBND): 4.46%
When comparing potential ETF investments, it is important to evaluate how deep and balanced the underlying portfolios are. Depth refers to how many individual securities comprise an ETF, while balance refers to how “top heavy” a product is–what percentage of assets are concentrated in the ten largest individual positions.
- Deepest Emerging Markets Bonds ETF: The SPDR Barclays Capital Emerging Markets Local Bond ETF (EBND) has approximately 230 individual holdings. The Market Vectors Renminbi Bond ETF (CHLC) is the “shallowest” ETFs, with only 20 individual holdings.
- Most Balanced Emerging Markets Bonds ETF: Emerging Markets Corporate Bond (CEMB) has just 12% of its 170 holdings in the top ten positions. At the other end of the spectrum, the Market Vectors Renminbi Bond ETF (CHLC) has over 65% of assets in the top ten stocks.
Disclosure: No positions at time of writing.