Invesco Emerging Markets Sovereign Debt ETF

PCY

Market cap $1.39B

The Invesco Emerging Markets Sovereign Debt ETF (NYSEARCA:PCY) has quietly become one of the better-performing fixed income vehicles of the past year, returning 16% over the trailing twelve months as the Federal Reserve cut its policy rate by 75 basis points and risk appetite returned.

VettaFi's Head of Research Todd Rosenbluth discussed the Invesco Emerging Markets Sovereign Debt ETF (PCY) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and strategy, visit the Innovative ETFs Content Hub.

Fidelity Enhanced High Yield ETF (NYSEARCA:FDHY) pays monthly, currently distributes around $0.27 per share, and has quietly delivered a 10% total price return over the past year.

Investors may be better off looking outside the world's core bond markets right now, Brij Khurana writes in a guest commentary.

The Invesco Emerging Markets Sovereign Debt ETF (NYSEARCA:PCY) attracts income investors with a 30-day SEC yield in the 6.1%-6.3% range and a monthly payout record dating back to 2007.

Invesco Emerging Markets Sovereign Debt ETF (NYSEARCA:PCY) pays a monthly distribution that works out to roughly 6.1% annually, which exceeds the current 10-year Treasury yield of around 4.3%.

Investors holding Invesco Emerging Markets Sovereign Debt ETF ( NYSEARCA:PCY ) have seen shares rise 14% over the past year, but the fund has flatlined since early December.

At the same time developed markets have been generating policy and macro noise, emerging markets have been quietly outperforming. The inextricable relationship between the direction of U.S. monetary policy and emerging market risk assets remains powerful, but this time the rally is not just about the Fed.

The Invesco Emerging Markets Sovereign Debt ETF targets higher-yielding sovereign debt from riskier emerging markets like Egypt, Nigeria, and Pakistan. PCY offers a 6.54% current yield and a 10.75-year average duration, with monthly distributions around $0.10 per share. Recent years have seen improved performance and rising institutional interest, though five- and ten-year returns were subpar.

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