VanEck Vectors Emerging Markets High Yield Bond UCITS ETF

Issuer: Van Eck

Asset Class: Fixed Income

TER: 40bps

Trading Currency: GBP

Pays Income: False

Listing Date: 23 Mar 2018

Ticker: HYGB

ISIN: IE00BF541080

This fund offers targeted exposure to the high-yield corporate bond market within emerging economies. It is designed for investors seeking to enhance their portfolio's income potential by tapping into the higher yields offered by corporations in developing nations. The strategy focuses on bonds denominated in hard currency, primarily U.S. dollars, which helps to mitigate some of the direct currency fluctuation risks associated with emerging market investments. By tracking a diversified index, the fund provides a broad representation of this specific market segment, spreading risk across numerous issuers, sectors, and countries. This approach can serve as a compelling satellite holding for a core fixed-income portfolio, offering both diversification benefits and a potentially higher stream of returns compared to traditional developed market debt.

Investing in emerging market high-yield bonds inherently involves a greater degree of risk. These securities, often referred to as 'junk bonds,' are issued by companies with lower credit ratings, making them more susceptible to default, especially during periods of economic stress. Furthermore, emerging markets themselves are subject to greater political, regulatory, and economic volatility. However, for this elevated risk, investors are compensated with the potential for superior yields and capital appreciation driven by the growth dynamics of these economies. This investment is therefore most suitable for individuals with a higher risk tolerance and a long-term investment horizon who are looking for a strategic allocation to a high-growth, high-income segment of the global fixed-income universe.