Vanguard Emerging Markets Government Bond ETF

VWOB

Market cap $5.32B

Dollar-denominated emerging market bonds offer some of the highest dividend yields in fixed-income markets today. VWOB is a simple index ETF focusing on these securities. It yields 5.9%, and has outperformed most bonds for several years.

The Vanguard Emerging Markets Government Bond ETF may be a mouthful, but it delivers a 5.7% yield with monthly distributions. The Vanguard Information Technology ETF has 45.6% of its portfolio concentrated in just three stocks.

Tightening credit spreads can create opportunities for fixed income investors to maximize in the current bond environment. In its latest iteration of Active Fixed Income Perspectives, Vanguard noted this spread compression across the full credit market spectrum during Q3.

Michigan-based Greystone Financial Group acquired 325,004 shares of VWOB in an estimated $21.7 million transaction during the third quarter. The transaction represents 3.4% of Greystone's reportable U.S. equity assets under management as of September 30.

As noted by TMX VettaFi Head of Research Todd Rosenbluth, fixed income ETFs are having a banner year amid record inflows. The Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX) were two of the top funds responsible for the $325 billion in net inflows (as of October 15).

The Vanguard Emerging Markets Government Bond Index Fund ETF invests in USD-denominated debt issued by emerging market governments. While the GDP growth outlook for emerging markets is marginally weaker in 2026, major VWOB holdings such as Saudi Arabia, Mexico, and the United Arab Emirates are forecast to outperform. VWOB has delivered stronger returns relative to U.S. treasury-focused ETFs such as IEF both in 2025 and over the past decade.

The first interest rate cut of the year put fixed income investors on notice that the high-rate, high-yield environment they've been accustomed to is beginning to change. With that, emerging market (EM) bonds may be an option to consider when looking to diversify income and/or maximize yield potential.

As fund flows during the month of July indicated, more investors continue to head overseas in order to get international bond exposure according to data from Morningstar. For those looking to overcome their U.S. bond home country biases, Vanguard has three funds that are worthy of consideration.

With talk of rate cuts getting more audible, they almost seem inevitable. Indeed, the CME FedWatch is forecasting an almost 90% chance of cuts.

I hope you enjoyed a great July, whether you were on vacation or not. I've been catching up on the fantastic content our team at ETF Trends and ETF Database produced in July 2025.