iShares JPMorgan USD Emerging Markets Bond ETF

EMB

Market cap $16.6B

If you're hunting for yield in 2026, emerging market bonds just became more interesting.

The iShares J.P. Morgan USD Emerging Markets Bond ETF ( NYSEARCA:EMB ) is delivering something rare: double-digit price appreciation without touching overheated US equities.

EM bond ETFs like EMB, VWOB, and PCY might draw investor interest as high real yields and a weaker dollar lift emerging markets.

It's a highly diversified asset class, and some managers see sweet spots in Turkey, Guatemala, Paraguay, Mexico and Malaysia.

Both iShares J.P. Morgan USD Emerging Markets Bond ETF and Global X Emerging Markets Bond ETF invest in Emerging Market bonds, both government and corporate issued. After reviewing both ETFs, two comparisons are done.  First just using the EM funds; a second comparing the better EM fund against other investing choices for bonds. While the results show EMBD has provided a higher return, long term it has trailed funds invested in other classes of bonds.

When it comes to equities exposure, U.S. large-caps continue to garner the lion's share of capital allocations. However, emerging markets (EM) could finally be in the throes of a comeback.

EMB offers diversified exposure to USD-denominated emerging market sovereign and agency bonds, with a balanced mix of investment-grade and high-yield issuances. The ETF provides higher yields than US Treasuries and may serve as a hedge against localized inflation and rate policy, but not against US inflation. Risks include significant exposure to below-investment-grade debt, potential fiscal challenges from US tariffs, and heightened political and economic uncertainties in emerging markets.

Investors are increasingly betting on higher long-term U.S. Treasury yields, due to growing concerns over the nation's rising debt and widening fiscal deficits.

The iShares J.P. Morgan USD Emerging Market Bond ETF (EMB) offers compelling diversification and an attractive yield relative to similar fixed income products. EMB's net expense ratio of 0.39% is reasonable given the limited product availability and higher costs associated with accessing the emerging market bond sector. EMB has delivered solid historical performance compared to other fixed income products with similar levels of risk.

Rising tariff turmoil has sparked a run from credit-sensitive instruments, with escalating trade tensions threatening economic stability. Wednesday's GDP print stoked recessionary fears when it showed the U.S. economy contracted for the first time since early 2022.