iShares JPMorgan EM Local Currency Bond ETF

LEMB

Market cap $735M

Bonds and the related ETFs did what they were supposed to do last year. They delivered income, finally reduced correlations to stocks, and added portfolio diversification.

The iShares JP Morgan EM Local Currency Bond ETF earns a Sell rating due to long-term capital erosion, unpredictable distributions, and high currency risk.

iShares J.P. Morgan EM Local Currency Bond ETF is an attractive play in a weak dollar environment, benefiting from local currency EM bonds and offering a 6.05% yield. The fund is overweight investment grade sovereigns, providing lower default risk compared to typical EM ETFs focused on high-yield names. LEMB offers strong diversification benefits, reducing U.S.-centric risk and showing less correlation with traditional U.S. fixed income assets.

Emerging market sovereign debt is not the best way to access emerging market growth this decade. 2023 saw positive performance for emerging market debt, but weaker 2024 performance and concerns about currency, growth, and inflation make 2025 less attractive. Geopolitical and economic risks, slower growth, and policy rate uncertainty contribute to a hazy outlook for sovereign debt in 2025.

As the world pulls in, emerging market bonds look like a once-in-a-generation opportunity. Here are the ETFs to buy.