HYEM: Tightening Spreads, Rising Risks
HYEM has a 0.40% expense ratio, 405 bonds, strong exposure to China, and BBB-CCC rated debt with a duration under 5 years. The spread between emerging market high-yield and investment-grade bond yields has narrowed to concerning lows. The threat of tariffs could lead to rising yields, which would push prices down.
Encouraging Signs for This High-Yield Bond ETF
Risk-tolerant investors searching for income and the potential for added upside with bonds have long turned to high-yield corporate debt and related ETFs. However, that focus has largely been limited to domestic offerings.
HYEM: Is It Time To Accumulate Emerging Market High Yield Bonds?
High-yield and high dividend investments through ETFs are preferred for preserving value. The increasing recession risks in the U.S. could favor a DCA strategy on emerging market high-yield bonds, unlike in the past. Fed rate cuts and dollar weakness could increase the demand for emerging market high yield bonds, and some data is already supporting this thesis.
HYEM: Emerging Market High-Yield ETF, Above-Average 6.0% Dividend Yield, Strong Momentum
Emerging market high-yield bonds offer the highest fixed-income yields in the market right now. HYEM is an index bond ETF focusing on these securities. Its dividend yield is a bit low at 6.0%, but it has a higher SEC yield and YTM. The fund is a solid investment choice, and has outperformed since my last coverage.
Best-Performing Bond ETFs For 2024
2024 has been a tough year for most bond funds, as delayed rate hikes led to lower bond prices. Some bond ETFs have managed to outperform in spite of these tough conditions. These tend to focus on investments with low, sometimes negative, duration.
Hone in on HYEM for Strong Income
At a time of weakness for broad domestic fixed income strategies, many investors may be pensive about international bonds, let alone high-yield emerging markets corporates. That's understandable, but a deeper examination is merited because there is potential for pleasant surprises.
HYEM: Frothy Markets Warrant Caution
HYEM, a high-yield emerging market bond ETF, has rallied alongside U.S. junk bonds due to tightening credit spreads. The rapid issuance of EM bonds in 2024 suggests a frothy market, cautioning investors. EM credit spreads are near decade-long lows, limiting further upside potential.
