“Emerging-markets local debt has been among the worst-performing fixed-income sectors in recent years, and 2021 was no exception,” said Mike Mulach, a research analyst manager for Morningstar, noting that the JPMorgan GBI -EM Global Diversified Index that tracks EM sovereign debt
Part of the allure with GRNB is that it taps into an important theme related to green bonds: Growth in this form of debt issuance isn’t confined to the U.S. More than 35 countries are represented in the fund, plenty of which are
BND seeks the performance of the Bloomberg U.S. Aggregate Float Adjusted Index, which represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States, including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and
Russian and Ukrainian bonds are not common holdings in most fixed-income portfolios; most investors have little exposure to them unless they own funds from the emerging-markets or nontraditional bond Morningstar Categories.
Treasury bond exchange traded funds have been on the mend, rebounding on the uncertainty over the Russia-Ukraine war and slowing growth concerns.
The falling yields and rising Treasury bond prices reflect investors’ growing concerns and doubts that the Fed would aggressively hike rates in these more uncertain times.
While it may not provide the yield of riskier debt, it’s ideal in the current market environment where uncertainty reigns.
Bonds can offer investors a safe haven against stock market volatility, while short-term bonds limit the risks of potential rate rises that can rob investors of fixed income opportunities.
That’s relevant for EMLC investors because the $3.4 billion fund follows the J.P. Morgan GBI-EM Global Core Index, and as of January 31, it had a 4.48% allocation to Russian bonds, according to issuer data.
Another benefit of Russia eventually being ejected from EMLC’s roster is that the ruble is in free fall and the fund holds bonds denominated in local currencies.
Institutional investors seeking high-yield fixed income exposure to the sector may want to consider the BondBloxx US High Yield Energy Sector ETF (NYSE Arca: XHYE). The U.S. high-yield bond fund targets the energy sector, including the exploration & production, gas distribution, oil field equipment & services, and oil refining & marketing sub-sectors.
A rule change from the NY Department of Financial Services could increase the demand for fixed income ETFs from New York State-based insurance companies, according to Fitch Ratings.
“The new rule reduces the amount of capital insurers must hold against bond ETFs that meet certain criteria, which may lead NY-based insurance companies to allocate more assets to these ETFs,” said Greg Fayvilevich, senior director at Fitch Ratings.
Three main segments of alternative credit are business development companies (BDCs), credit-centric closed-end fund (CEFs) and mortgage real estate investment trusts (REITs).”
Something to note is that alternative credit can be more volatile than traditional income-generating assets, but as HYIN shows, investors are compensated for that risk with a high yield.
Despite the recent turmoil in emerging-markets local bonds, they could be an attractive option based on valuations,” Morningstar said.
One Vanguard offering is the Vanguard Emerging Markets Government Bond Index Fund ETF Shares (VWOB A+).
“Through these ETFs, investors now have an approach that allows them to build a core fixed income portfolio, capturing both the investment grade and high yield universes, while also incorporating sophisticated credit hedge overlays to help protect against sudden shifts in credit spreads
The fund’s core bond exposure will be delivered via the low-cost, highly liquid iShares Core U.S. Aggregate Bond ETF (AGG) with a credit hedge overlay consisting of a combination of CDX calls, quality-junk factor-based hedges, or SPX puts, selected opportunistically by the Simplify team, according to a statement from the firm.
With inflation data weighing heavy on the capital markets, an active management strategy to help navigate the fickle bond markets while getting yield is a must.
TAGG seeks to outperform the Bloomberg U.S. Aggregate Bond Index.
Build Asset Management, an asset management firm specializing in strategies focused on fixed income and options, just launched the BUILD Bond Innovation ETF (NYSE Arca: BFIX), a bond allocation fund designed for a modern global environment defined by low interest rates and constrained economic growth.
