5 min readBy Ron Koren ETF Insider
How does the EMHY ETF work?
The EMHY ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
The EMHY ETF, known as the iShares J.P. Morgan USD Emerging Markets High Yield Bond ETF, is managed by BlackRock Fund Advisors (BFA). This ETF aims to track the J.P. Morgan USD Emerging Markets High Yield Bond Index, which consists of below investment-grade U.S. dollar-denominated bonds issued by corporate, sovereign, and quasi-sovereign entities in emerging markets. BFA utilizes a passive indexing approach, seeking to replicate the performance of the underlying index rather than actively managing the portfolio. The ETF primarily invests in fixed-income securities included in the index, with an emphasis on maintaining a high correlation with the index's returns while minimizing turnover and achieving cost efficiency.
The iShares J.P. Morgan USD Emerging Markets High Yield Bond ETF (EMHY) offers investors exposure to high-yield bonds in emerging markets. While the primary objective of this ETF is to track the performance of the J.P. Morgan USD Emerging Markets High Yield Bond Index, it also provides dividend distributions based on the interest income generated from its underlying bonds. These distributions typically occur on a periodic basis, and their eligibility is determined by the bonds included in the index. Bonds that meet specific criteria, such as being issued by emerging market entities, having a minimum face amount outstanding, and meeting credit rating requirements, are considered for inclusion in the index. EMHY investors can expect potential income from the interest payments made by the bonds held within the fund's portfolio, making it a suitable choice for those seeking yield from emerging market high-yield debt securities.
Tracking the J.P. Morgan USD Emerging Markets High Yield Bond Index is the primary objective of the EMHY ETF. This exchange-traded fund aims to mirror the performance of below investment-grade U.S. dollar-denominated, emerging market fixed and floating-rate debt securities issued by various corporate, sovereign, and quasi-sovereign entities. The Underlying Index, also known as the high yield bond index, includes securities that have ratings below investment-grade by credit rating agencies like Moody’s, S&P Global Ratings, and Fitch Ratings. EMHY's portfolio consists of bonds from issuers headquartered in emerging market countries, those guaranteed by such entities, and those with operating assets within emerging market economies. It utilizes a representative sampling indexing strategy to achieve its investment objective and typically invests at least 80% of its assets in component securities of the Underlying Index.
The correlation aspect of the iShares J.P. Morgan USD Emerging Markets High Yield Bond ETF (EMHY) is integral to understanding its performance within the realm of emerging market high-yield bonds. Given that EMHY tracks the J.P. Morgan USD Emerging Markets High Yield Bond Index, it tends to exhibit a high correlation with the behavior of these bonds, which are typically considered junk bonds. This correlation makes EMHY a valuable tool for investors seeking exposure to this asset class, offering insights into the risk and return dynamics of emerging market high-yield debt. For a more detailed exploration of correlations involving EMHY and other assets or sectors, ETF Insider provides a user-friendly web app with advanced data visualization tools, allowing investors to gain deeper insights into their investment decisions and uncover potential overlaps with their portfolios.
The EMHY ETF, which seeks to track the J.P. Morgan USD Emerging Markets High Yield Bond Index, primarily invests in below investment-grade U.S. dollar-denominated, emerging market fixed and floating-rate debt securities. These bonds are issued by corporate, sovereign, and quasi-sovereign entities in emerging market countries, making the ETF highly concentrated in the high-yield bond sector. This concentration can potentially offer higher yields but also carries a higher level of credit risk due to the nature of high-yield, or junk, bonds. Investors in EMHY should be aware of the associated risks while pursuing the potential for attractive returns.
The exposure characteristic of the iShares J.P. Morgan USD Emerging Markets High Yield Bond ETF] (EMHY) revolves around the J.P. Morgan USD Emerging Markets High Yield Bond Index. This ETF provides investors with access to below investment-grade U.S. dollar-denominated, emerging market fixed and floating-rate debt securities issued by corporate, sovereign, and quasi-sovereign entities. By tracking this index, EMHY offers exposure to a diverse range of emerging markets and high-yield bonds, also known as junk bonds. Investors seeking opportunities in this asset class can utilize EMHY as a tool to access these markets and potentially capitalize on higher-yielding debt instruments.
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