VanEck Vectors EMInvGrd+BBR USD SovBdETF

In March 2017, Citi’s fixed income indexes decided to include onshore Chinese bonds (EMB) (PCY) in its three government bond indexes.

In the emerging market bond space (PCY) (EMLC), high-yield bonds and local currency bonds outperformed hard currency sovereign bonds.

The opening of China’s onshore bond market (EMB) (PCY) was a gradual process that included a number of cautious measures.

It’s useful to analyze the historical returns of credit rating categories within emerging markets bonds.

Real yields in emerging markets (or EM) have remained at compelling levels over the past few years.

The yuan remains a focus of attention of the international community and a key risk for China’s macroeconomic stability in recent years.

Government bond yields in China are higher than its Asian counterparts such as South Korea and Singapore and much higher than major developed markets.

With the onset of reforms, foreign holdings in China’s onshore bond (EMB) (PCY) market is gradually increasing.

Many leading bond index providers are still not including China’s onshore bonds in their benchmark indexes due to various regulatory and operational concerns.

China’s onshore bond market (EMB), consisting of locally denominated and issued bonds, is larger than the offshore bond market.

Emerging market economies have bounced back in 2016, delivering strong economic growth with improved fundamentals and better capital management.

In today’s context, emerging market bonds (IGEM) look like good opportunities for investors.

Investment-grade emerging market sovereigns have been given BBB or higher credit ratings by one of the credit rating companies. They’re relatively safe.

Emerging market bonds have been doing extremely well over the past couple of months. EM debt funds have been in the green for seven consecutive weeks.