WisdomTree Emerging Markets Local DebtELD

ETF Research and Analysis

by Timothy Strauts

Suitability
WisdomTree Emerging Markets Local Debt ELD is suitable for use as a satellite holding within a diversified fixed-income allocation. The emerging-markets debt space has become increasingly popular in recent years. Excellent Read more

Bull Case

Local-currency emerging-markets bonds provide an opportunity to benefit from relative currency gains, which should materialize over the long term thanks to emerging markets' fiscal stability and higher economic growth.

With relatively low correlations to other major asset classes, emerging-markets debt offers valuable diversification benefits.

This fund provides convenient, low-cost exposure to an actively managed portfolio of local-currency emerging-markets government bonds. Read more

Bear Case

Although it should bolster long-term returns and improve diversification, the fund's exposure to local currencies also increases volatility.

A surge in demand has driven prices higher and lowered yields. Investors should make sure to be adequately compensated for the risks associated with emerging markets.

While credit quality has been improving over the past several years, emerging markets still court unique risks related to lower transparency, weaker governance, and less liquidity. Read more