Skip directly to Accessibility Notice

Supportive Tailwinds for EM Debt

September 21, 2022

Read Time 2 MIN

The Fund continues to outperform its benchmark year–to–date, in part, benefitting from its continued conviction that China property–sector bonds are oversold and underpriced.

The U.S. Federal Reserve (Fed) looks set to keep rates higher for longer than the market expected, and the European Central Bank (ECB) is only now jumping on that bandwagon with a new hawkish tilt. The best thing going for September seems to be how bearish so many are on risk. Emerging markets (EM) sovereign high yield (HY) spreads are at crisis highs (i.e., GFC, Covid crises), with strong fundamentals and as we have stated numerous times, EM hiked earlier and larger than any of the developed markets (DM). Thus, we see mostly sunny EM skies around DM clouds.

The Emerging Markets Bond Fund (the “Fund”) was up 1.47% in August, compared to a loss of 0.53% for its benchmark. August’s 200bp of outperformance brings YTD outperformance to 642bp. Year–to–date, owning no Russia, navigating Ukraine and not keeping our duration view on “autopilot” drove performance. The Fund’s outperformance in August was due primarily to China, where our view that property–sector (and other) bonds were majorly oversold and underpriced finally paid off. For detailed Fund performance and EM debt outlook, download the commentary.

To receive more Emerging Markets Bonds insights, sign up in our subscription center.


This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results. 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. Any opinions, projections, forecasts, and forward–looking statements presented herein are valid as of the date of this communication and are subject to change without notice. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

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. Quantitative Easing by a central bank increases the money supply engaging in open market operations in an effort to promote increased lending and liquidity. Monetary Easing is an economic tool employed by a central bank to reduce interest rates and increase money supply in an effort to stimulate economic activity. Correlation is a statistical measure of how two variables move in relation to one other. Liquidity Illusion refers to the effect that an independent variable might have in the liquidity of a security as such variable fluctuates overtime. A Holdouts Issue in the fixed income asset class occurs when a bond issuing country or entity is in default or at the brink of default, and launches an exchange offer in an attempt to restructure its debt held by existing bond holding investors. Carry is the benefit or cost for owning an asset.

Investing involves risk, including loss of principal. You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to risks associated with its investments in below investment grade securities, credit, currency management strategies, debt securities, derivatives, emerging market securities, foreign currency transactions, foreign securities, hedging, other investment companies, Latin American issuers, management, market, non–diversification, operational, portfolio turnover, sectors and sovereign bond risks. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. As the Fund may invest in securities denominated in foreign currencies and some of the income received by the Fund will be in foreign currencies, changes in currency exchange rates may negatively impact the Fund’s return. Derivatives may involve certain costs and risks such as liquidity, interest rate, and the risk that a position could not be closed when most advantageous. The Fund may also be subject to risks associated with non–investment grade securities.

Investors should consider the Fund’s investment objective, risks, charges, and expenses of the investment company carefully before investing. Bond and bond Funds will decrease in value as interest rates rise. The prospectus and summary prospectus contain this and other information. Please read them carefully before investing. Please call 800.826.2333 or visit for performance information current to the most recent month end and for a free prospectus and summary prospectus.

© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.

1 - 3 of 3