VWOB ETF

Improving fundamentals are emboldening institutional money managers to take on more emerging market bonds. In a true sign of a risk-on sentiment, these managers are adding the riskiest of bonds in EM countries.

Aggressive income investors could love this Vanguard ETF.

One Vanguard ETF offers a different twist on investing in bonds. This ETF pays a higher 30-day SEC yield than any other member of the Vanguard family.

The possibility of interest rate reductions in the United States is increasing interest in emerging market assets like bonds. The appeal of EM debt goes beyond just the yield, with their strong government debt to GDP ratios also standing out.

The Vanguard Emerging Markets Government Bond Fund has a competitive expense ratio of 0.20% and a 30-day SEC yield of close to 7%. With 727 bond holdings from countries such as Qatar, Argentina, and China, the fund is well-diversified. The appeal of emerging market bonds is increased by the possibility of rate cuts by the European Central Bank and a decelerating US economy.

Demand for emerging markets (EM) bonds are heating up as fixed income investors expect rate cuts to occur following the Federal Reserve's reiteration of looser monetary policy this year. Argentina bonds are one of those offerings hitting new highs amid other factors aside from rate cuts.

Inflows into emerging market (EM) ETFs confirm that investors are ready to pile back into riskier assets. In the case of bonds, improving credit profiles are also stoking investors' appetite for EM bonds.

A higher-than-expected consumer price index (CPI) during the month of January may have pushed the dollar higher in the interim, but the overall trend portends declining strength once the U.S. Federal Reserve cuts interest rates. That should eventually pave the way for emerging markets (EM) bonds.

The anticipation of a bond market comeback is sparking more traders to make bold moves in riskier corners of the credit spectrum, including emerging market (EM) debt. To tail their moves, fixed income investors can also look to exchange-traded funds (ETFs) focusing on EM bonds.