HYEM 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.

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.

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.

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.

Concerns about a potential debt crisis caused by foreign entities borrowing in dollars and causing financial distress and global contagion. The VanEck Emerging Markets High Yield Bond ETF (HYEM) is worth considering after a bout of global volatility and dislocation in credit markets. HYEM holds a diverse portfolio of high-yield bonds from various emerging markets, with a focus on sectors like finance, energy, and basic materials.

HYEM offers investors a 6.5% yield and prospective dividend growth from higher rates. Total returns have been quite good for the past year, and dividend growth is mediocre. An overview of VanEck Emerging Markets High Yield Bond ETF follows.

On July 26, the Federal Reserve boosted interest rates by 25 basis points to the highest levels in 22 years while indicating that at least one more rate hike could be on the table this year. The 11th rate increase since March 2022 could imply that the central bank remains concerned about inflation.