Emerging Market Bonds
As a group, emerging markets have debt equal to ~ 1/3 their GDP, half that of the U.S. The average emerging market has a budget deficit of ~ 2% of GDP versus more than 11% for the U.S. The investment-grade portion of the J.P. Morgan Emerging Market Bond Index jumped from 2% in 1993 to 58% by November 2011; > 70% of the issuers in the J.P. Morgan Emerging Markets Bond Index are investment grade. The index is comprised of 215 holdings with an effective average duration of 8 years (2013).
As of February 2013, the iShares Emerging Markets USD Bond ETF (symbol EMB) had a 12-month yield of 4.3%. This ETF has an average weighted maturity of 11.8 years and an effective duration of 7.5 years. Over the past three years, the ETF had a 7% standard deviation.
For 2012, the ETF was up 17.6%; its annualized returns for the past three years was 12%; 9.5% for the past five years.