VanEck EMBX yields 5.78%, tops U.S. Treasuries YTD

VanEck’s Emerging Markets Bond ETF (EMBX) has risen more than 3% year-to-date and records a 30-day SEC yield of 5.78%. The fund holds 133 bonds, has a duration of 5.51 years and manages about $267 million in assets. EMBX will mark its 14th anniversary in July.

The ETF is actively managed and can invest in sovereign and corporate debt, in dollar-denominated and local-currency bonds. Managers can change country, currency and credit exposure without the holding rules that apply to many passive global and domestic aggregate bond ETFs.

Portfolio managers recently increased several local-currency positions across developing-world sovereign and corporate debt and trimmed allocations to limit exposure linked to the conflict in the Middle East. Local-currency exposure was reduced in Thailand, South Korea, South Africa, Poland and Hungary, with Poland identified as facing worsening fiscal metrics.

VanEck portfolio manager Eric Fine noted that emerging-market bonds are outperforming the Global Aggregate and U.S. Treasuries. He added that many emerging economies show stronger balance sheets and that several are net exporters compared with developed markets. Managers say the 5.51-year duration places the fund in intermediate-term territory and allows adjustment to interest-rate moves while some emerging-market central banks keep policy tighter than developed-market peers.

Launched in July 2012, the ETF aims to provide income through emerging-market credit while managing country, currency and duration risks. Its recent performance versus the Global Aggregate and U.S. Treasuries reflects the fund’s current positioning in emerging-market debt.