EM Debt Strength Holds as DM Policy Noise Grows
February 10, 2026
Read Time 6 MIN
Key Takeaways:
- Emerging markets have recently outperformed developed markets despite ongoing rate volatility.
- Local currency exposure and carry are driving returns, even as rising U.S. yields weigh on USD bonds.
- Geopolitical shocks benefited EM assets again, reinforcing their relative value compared to developed markets. EMBX is currently yielding 5.56% (30-Day SEC Yield)*
*Past performance is no guarantee of future results. Please see 30-Day SEC Yield definition and disclosures at the end of this content.
The views and opinions stated herein should not be construed as any call to action, are not recommendations to buy or sell any security, or to adopt any investment strategy, are for illustrative purposes only, are subject to change without notice, and are those of the author(s) and not necessarily those of VanEck or its other employees.
The VanEck Emerging Markets Bond ETF (EMBX) is yielding 5.56% (30-Day SEC Yield), and was up 2.19% in January, compared to 1.43% for its benchmark, the 50% J.P. Morgan Government Bond Index - Emerging Markets Global Diversified (GBI-EM) and 50% J.P. Morgan Emerging Markets Bond Index (EMBI), 0.96% for the Global Agg, and -0.26% for the planet’s favorite “safe haven”, low volatility asset, US Treasuries. In 2025, the ETF was up 19.05% compared to 16.79% for its benchmark. Local currency led the month, with USD bonds able to rally but held back by “risk” in the “risk-free” asset, Treasuries (i.e., yields rose). We made few material changes, despite a very strong January and 2025. Local currency exposure is at 48%, Carry is 6.5%, yield to worst (YTW) is 7.5% and duration is 5.2.
Average Annual Total Returns* (%) (In USD)
| Month End As of January 31, 2026 | 1 Mo | 3 Mo | YTD | 1 Yr | 3 Yrs | 5 Yrs | 10 Yrs |
| EMBX (NAV) | 2.20 | 4.47 | 2.20 | 19.17 | 9.93 | 4.48 | 5.76 |
| EMBX (Share Price) | 2.23 | 4.40 | 2.23 | 19.07 | 9.89 | 4.46 | 5.75 |
| 50% GBI-EM/50% EMBI | 1.43 | 3.45 | 1.43 | 16.43 | 9.26 | 2.00 | 4.34 |
Average Annual Total Returns* (%) (In USD)
| Quarter End As of December 31, 2025 | 1 Mo | 3 Mo | YTD | 1 Yr | 3 Yrs | 5 Yrs | 10 Yrs |
| EMBX (NAV) | 1.41 | 3.15 | 19.04 | 19.04 | 10.84 | 3.87 | 5.49 |
| EMBX (Share Price) | 1.12 | 3.03 | 18.91 | 18.91 | 10.80 | 3.85 | 5.48 |
| 50% GBI-EM/50% EMBI | 1.11 | 3.32 | 16.80 | 16.80 | 10.08 | 1.50 | 4.20 |
* Returns less than one year are not annualized.
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Please call 800.826.2333 or visit vaneck.com for performance current to the most recent month ended.
Prior to 10/06/2025, the Fund operated as the VanEck Emerging Markets Bond mutual fund; performance shown before that date is that fund’s NAV performance (Class I, unadjusted for today’s ETF expenses).
The "Net Asset Value" (NAV) of a Fund is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. Investors should not expect to buy or sell shares at NAV.
EMBX Total Expense Ratio – 0.76%. Van Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund, except for the fee payment under the investment management agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to pay the offering costs until at least May 1, 2027. “Other Expenses” have been restated to reflect current fees.
EMBX | VanEck Emerging Markets Bond ETF
Warsh happened. World panicked. EM rallied. We like to comment when we have something to say that you might not have heard before, or to re-explain something that might be poorly explained/understood. Nothing to say here. Dovish for rates and hawkish for balance sheet? This is well-discussed terrain. Our only framing is that central banking is hyper-politicized in the US. Now, we’re open to the idea that Warsh could be viewed as anti-politicization, too. The market’s view is the former. Is that what you want as a reserve asset?
Venezuela happened. World panicked. EM rallied. In fact, Venezuela bonds gapped higher and neighboring Colombia did the opposite of panicking by being the strongest local currency YTD (we are overweight). We were overweight Venezuela bonds (in USD) through the critical weekend after which bonds gapped higher. And we bought more since (on a brief pullback)1. We’ve written in detail on both Venezuela and Colombia (Dave Austerweil and Natalia Gurushina have a truly great and geeky piece coming out on how our process values Venezuela, stay tuned). The appropriate spin is yet again “geopolitical risk boosts EM”. Your author is in Dubai as he writes, and they are worried about Iran “risk”. Just like everyone was worried about Venezuela “risk”. I believe the market’s perception of risk appeared asymmetric during this period. Your author is struck by the consensus here that Iran represents “risk,” Let’s state this simply: a significant negative outcome for Iran could, paradoxically, reduce the risk and discount rate that should be applied to assets elsewhere in the region, (those that are not in Iran). We think it’s bullish.. And it will create potential opportunities.
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Exposure Types and Significant Changes
The changes to our top positions are summarized below. Our largest positions in January were Mexico, Brazil, Malaysia, Poland, and Colombia:
- We increased our hard currency sovereign exposure in Ecuador. The country’s fiscal consolidation is on track, and at the end of December the IMF approved the fourthhreview of the Extended Fund Facility program, unlocking additional disbursements. The government also successfully tapped the international financial market (USD4B), lowering the risk associated with forthcoming maturities. In terms of our investment process, this improved the policy/politics test score for the country.
- We also increased our hard currency sovereign exposure in Venezuela, following the dramatic shift in the political landscape that resulted in the removal of President Maduro and the appointment of Delcy Rodriguez as the acting president. Rodriguez is considered practical and intent on working together with the U.S., which increases the probability of the “goldilocks” scenario with subsequent elections and inflows in Venezuela’s oil sector. This scenario also increases the chances of a creditor-positive debt restructuring with high recovery value for bondholders. In terms of our investment process, this improved the policy/politics test score for the country.
- We reduced our local currency exposure in Uruguay, where the central bank surprised with a massive 100 bps rate cut in order to weaken the currency and make sure that inflation does not fall below the target range. Uruguay was a popular long among investors in EM local debt, but the rate worsened the policy/politics test score for the country, leading to profit-taking.
- We also reduced our hard currency sovereign exposure in South Africa. South Africa’s sovereign spread closed the gap with BB-rated sovereigns (which opened in the middle of 2023) as the market almost fully priced in structural and policy improvements under the government of national unity. In the absence of new positive catalysts, this worsened the technical test score for the country, exposing it to the negative influence of exogenous factors.
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Disclosure
1 Statements regarding portfolio positioning are included solely to describe past fund activity and do not represent investment advice or guidance for any investor.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
30-Day SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparison among funds. It is based on the most recent 30-Day period. This yield figure reflects the interest earned during the period after deducting the Fund’s expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last twelve months assuming the most recent NAV.
Duration measures a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. This duration measure is appropriate for bonds with embedded options. Carry is the benefit or cost for owning an asset. Yield to worst is a measure of the lowest possible yield that can be received on a bond with an early retirement provision. Averages are market weighted. The yields presented do not represent the performance of the Fund. These statistics do not take into account fees and expenses associated with investments of the Fund.
All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. Certain indices may take into account withholding taxes. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made.
The Fund's benchmark index (50% GBI-EM/50% EMBI) is a blended index consisting of 50% J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified and 50% J.P. Morgan Emerging Markets Bond Index (EMBI). The J.P. Morgan GBI-EM Global Diversified tracks local currency bonds issued by Emerging Markets governments. The J.P. Morgan EMBI Global Diversified tracks returns for actively traded external debt instruments in emerging markets, and is also J.P. Morgan's most liquid U.S. dollar emerging markets debt benchmark.
The Bloomberg Global Aggregate Index measures the performance of global investment grade fixed income securities.
The FTSE Treasury Benchmark 10 year measures the return of the 10 year U.S. Treasury.
Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The index may not be copied, used or distributed without J.P. Morgan's written approval. Copyright 2025, J.P. Morgan Chase & Co. All rights reserved.
An investment in the VanEck Emerging Markets Bond ETF may be subject to risks which include, among others, risks related to active management, credit, credit-linked notes, currency management strategies, derivatives, emerging market issuers, ESG investing, foreign currency, foreign securities, hedging, high portfolio turnover, high yield securities, interest rate, market, non-diversified, operational, restricted securities, investing in other funds, sovereign bond, special risk considerations of investing in African, Asian, and Latin American issuers, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount and liquidity of fund shares, and cash transactions risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation.
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Disclosure
1 Statements regarding portfolio positioning are included solely to describe past fund activity and do not represent investment advice or guidance for any investor.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
30-Day SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparison among funds. It is based on the most recent 30-Day period. This yield figure reflects the interest earned during the period after deducting the Fund’s expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last twelve months assuming the most recent NAV.
Duration measures a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. This duration measure is appropriate for bonds with embedded options. Carry is the benefit or cost for owning an asset. Yield to worst is a measure of the lowest possible yield that can be received on a bond with an early retirement provision. Averages are market weighted. The yields presented do not represent the performance of the Fund. These statistics do not take into account fees and expenses associated with investments of the Fund.
All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. Certain indices may take into account withholding taxes. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made.
The Fund's benchmark index (50% GBI-EM/50% EMBI) is a blended index consisting of 50% J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified and 50% J.P. Morgan Emerging Markets Bond Index (EMBI). The J.P. Morgan GBI-EM Global Diversified tracks local currency bonds issued by Emerging Markets governments. The J.P. Morgan EMBI Global Diversified tracks returns for actively traded external debt instruments in emerging markets, and is also J.P. Morgan's most liquid U.S. dollar emerging markets debt benchmark.
The Bloomberg Global Aggregate Index measures the performance of global investment grade fixed income securities.
The FTSE Treasury Benchmark 10 year measures the return of the 10 year U.S. Treasury.
Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The index may not be copied, used or distributed without J.P. Morgan's written approval. Copyright 2025, J.P. Morgan Chase & Co. All rights reserved.
An investment in the VanEck Emerging Markets Bond ETF may be subject to risks which include, among others, risks related to active management, credit, credit-linked notes, currency management strategies, derivatives, emerging market issuers, ESG investing, foreign currency, foreign securities, hedging, high portfolio turnover, high yield securities, interest rate, market, non-diversified, operational, restricted securities, investing in other funds, sovereign bond, special risk considerations of investing in African, Asian, and Latin American issuers, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount and liquidity of fund shares, and cash transactions risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation.