According to a study conducted by Bank of America Merrill Lynch, this segment has expended 265% since 2003, and the recent launch of ETF is Market Vectors’ strategy to tap the growing market.
Market Vectors portfolio manager Francis Rodilosso said this corner of the high-yield debt market has grown significantly in recent years and investor exposure may not have kept pace.
"For investors seeking yield this is significant as USD-denominated EM high yield corporate bonds are currently generating higher yields than USD-denominated EM high-yield sovereign bonds and U.S. high-yield corporate," Rodilosso added.
The wealth manager said that investing in emerging market high-yield debt and high-yield securities in general is also associated with the risk, including the inherent volatility of high-yield security prices, fluctuating interest rates, currency risks, extreme volatility and political uncertainty, among others.
Market Vectors marketing director Edward Lopez said with HYEM, the emphasis is on USD-denominated corporate debt, which now accounts for over 10% of the global high-yield corporate bond market.
"Through this fund, investors now have a simple, transparent way to add targeted exposure to this segment of the high-yield market," Lopez said.
