Invesco Emerging Markets Sovereign Debt ETF

PCY tracks a tier-weighted index of US-dollar-denominated sovereign debt in emerging markets with at least 3 years to maturity.

Lauded for their yield, emerging markets (EM) bonds could be a compelling option even when taking credit risks into account. The macroeconomic environment in particular adds intrigue to funds like the Invesco Emerging Markets Sovereign Debt ETF (PCY).

Abating Risks in Emerging Markets Adds Intrigue to Bonds

Amid expectations that the Federal Reserve will reduce interest rates this year — perhaps multiple times, — there's renewed interest in U.S. bonds, both corporate and Treasuries. However, fixed income investors shouldn't take their eye of the international ball.

Investors Renew Interest in Emerging Markets Bonds

Invesco Emerging Markets Sovereign Debt ETF is a high-risk investment due to its exposure to non-investment grade bonds and sensitivity to interest rates. The fund has a relatively high expense ratio compared to its peers, potentially impacting investor returns. Risks include potential defaults by issuing governments, the impact of a stronger U.S. dollar, and a global credit event.

PCY: Way Too Risky Now And Better Options Anyway

An improving macroeconomic landscape could be providing opportunities in emerging markets (EM) debt. It's an option worth considering, especially if the fixed income goal is to pair yield with growth.

Pair Yield and Growth With This Emerging Markets Bond ETF

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WisdomTree Emerging Markets High Dividend Fund

ALPS Emerging Sector Dividend Dogs ETF

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Emerging markets can come with a lot of growth potential. However, they also usually have more volatility than you might get with developed markets.

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Uncertainty around interest rates, inflation, and the possibility of recession are top of mind as advisors allocate to fixed income ETFs. Most investors are staying within the short to intermediate part of the curve, opting for balanced fixed income exposure as opposed to making big bets.

Which Fixed Income ETFs Stand Out in the Current Environment?

Invesco Taxable Municipal Bond ETF

Invesco Senior Loan ETF

Invesco Preferred ETF

Invesco Fundamental High Yield Corporate Bond ETF

Invesco Variable Rate Preferred ETF

Invesco has six non-core fixed income ETFs that advisors can add to portfolios to create alpha opportunities and increase portfolio diversification. Exposure to non-core fixed income is important as the largest U.S. bond index only provides exposure to approximately 40% of the U.S.

Use Invesco's Non-Core Fixed Income ETFs to Enhance Returns

PCY invests in sovereign bonds in the emerging markets. Sovereign debt default rates will likely remain elevated in 2023.

PCY: The Worst Has Yet To Come

PCY invests heavily in below investment grade government bonds with relatively high duration. Its portfolio isn't properly diversified. PCY failed to generate attractive total return for its investors, and undertook risks that are disproportionate to its coupon income.

PCY: Risky Investment In Below Investment Grade Sovereign Bonds

VanEck Vectors Brazil Small-Cap ETF

Direxion Daily MSCI Brazil Bull 2X Shares

ProShares UltraShort MSCI Brazil Capped

SPDR Bloomberg Emerging Markets Local Bond ETF

iShares MSCI Chile ETF

WisdomTree Emerging Markets Local Debt Fund

VanEck Vct Emrg Shs

SPDR Bloomberg Emerging Markets USD Bond ETF

iShares Emerging Markets High Yield Bond ETF

VanEck J.P Morgan EM Local Currency Bond ETF

SPDR DoubleLine Emerging Markets Fixed Income ETF

iShares MSCI Poland ETF

iShares MSCI Mexico ETF

iShares MSCI Brazil ETF

iShares MSCI Brazil Small-Cap ETF

iShares MSCI South Africa ETF

First Trust Brazil AlphaDEX Fund

First Trust Emerging Markets Local Currency Bond ETF

Franklin FTSE Brazil ETF

Franklin FTSE Mexico ETF

Franklin FTSE South Africa ETF

JPMorgan USD Emerging Markets Sovereign Bond ETF

iShares J.P. Morgan EM Local Currency Bond ETF

Vanguard Emerging Markets Government Bond ETF

Central banks across emerging markets have reacted to elevated inflation by significantly tightening monetary policy, in some cases, well ahead of the U.S. Federal Reserve and the European Central Bank. After largely synchronized rate-hiking cycles across EM, monetary policies could once again begin to diverge among individual countries.

Peak Inflation May Hint At Peak Rates In Emerging Markets

iShares Emerging Markets Dividend ETF

iShares MSCI Emerging Markets ETF

iShares JP Morgan USD Emerging Markets Bond ETF

Global X MSCI SuperDividend Emerging Markets ETF

Invesco DB US Dollar Index Bullish Fund

Falling inflation in many developing economies, cheaper valuation and higher yields may boost some emerging markets ETFs.

Time for Beaten-Down Emerging Markets ETFs?

American Century Emerging Markets Bond ETF

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VanEck China Bond ETF

iShares J.P. Morgan EM Corporate Bond ETF

Morgan Stanley Emerging Markets Domestic Debt Fund Inc

Virtus Stone Harbor Emerging Markets Income Fund 

Stone Harbor Emerging Markets Total Income Fund

Global X Emerging Markets Bond ETF 

WisdomTree Emerging Markets Corporate Bond Fund

Western Asset Emerging Markets Debt Fund

VanEck Emerging Markets High Yield Bond ETF

KraneShares Asia Pacific High Yield Bond ETF

Morgan Stanley Emerging Markets Debt Fund

Franklin Templeton Emerging Markets Income Fund

In emerging markets valuations look attractive today after the losses across financial markets early this year. PIMCO's investment process is founded upon our macroeconomic outlook and our in-house country and credit research.

Spotting Opportunities And Risks Across The EM Investment Universe

As the markets rebound, fixed-income investors can consider picking up some emerging market bond-related exchange traded funds. Morgan Stanley strategists led by Simon Waever advised in a note that should consider emerging market debt, making a bullish stance on the asset category for the first time since November 2020, Bloomberg reports.

Emerging Market Bond ETFs Are on the Mend

With the Federal Reserve raising interest rates and the potential for the pace of that tightening to increase, it's understandably difficult for investors to be enthusiastic about fixed income assets. That's certainly true of emerging markets bonds and the related exchange traded funds — assets with established track records of faltering as U.S. interest rates [.

This Emerging Markets Fund Could Surprise as Fed Boosts Rates

PCY is down more than -16% since our article came out. The fund has been routed by the higher 10-year yields and the current Ukraine conflict implications.

PCY - Moving From Sell To Hold After The Rout

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WisdomTree Emerging Currency Strategy Fund

iShares Interest Rate Hedged Emerging Markets Bond ETF

ProShares Short Term USD Emerging Markets Bond ETF

KraneShares Bloomberg China Bond Inclusion Index ETF

Krane Shares Trust - KraneShares CCBS China Corporate High Yield Bond USD Index ETF

KraneShares E Fund China Commercial Paper ETF

Cambria Sovereign High Yield Bond ETF

Performance of emerging markets local currency bonds has been negatively impacted by the U.S. dollar's strength since mid-year, despite the higher real yields and upside growth surprises in many emerging markets. Currency returns can be volatile, and external factors can have a bigger short-term impact on an emerging markets currency (EMFX) even if relatively attractive fundamentals may provide longer-term support.

Technical Tailwinds May Lift EMFX

El Salvador is set to make Bitcoin a legal form of currency, and ETF investors can get exposure to the country via its bonds through the Invesco Emerging Markets Sovereign Debt ETF (PCY). As such, the leading cryptocurrency is generating activity within social media spheres.

Get El Salvador Exposure With This ETF After Country Legalizes Bitcoin

PCY is a sovereign EM hard currency debt fund with a 4.42% 12-month yield.

PCY - A High Duration, High Fee Fund Best Revisited When Rates Are Higher

SPDR SSGA Fixed Income Sector Rotation ETF

Emerging markets offer attractive alternatives to fixed income investors searching for yield amid the trillions of dollars of negative-, zero-, and low-yielding debt globally. Within emerging market hard currency investment grade bonds, we think it is prudent to be shorter duration or at least hedge the Treasury risk component, given the low yield per unit of duration today.

3 Segments, Multiple Opportunities In Emerging Markets

Historically, low domestic rates and accommodative central bank policy have highlighted international assets like the Invesco Emerging Markets Sovereign Debt ETF (PCY). PCY is based on the DBIQ Emerging Market USD Liquid Balanced Index.

Q2's Case for Emerging Market Bond ETFs

Investors are still disappointed with many income-generating assets as interest rates remain low, but with the dollar weak, emerging markets debt is growing increasingly appealing. Enter the Invesco Emerging Markets Sovereign Debt ETF (PCY).

U.S. Bonds Still Disappoint. But EM Debt ETFs Are Going Strong

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EMs have suffered a lot amid the pandemic. Undervaluation, better growth prospects, massive Fed rate cut, higher interest rates in EMs have opened up opportunities for EM ETFs now.

Time for Emerging Market ETFs?

Prospects for disinflation in the emerging market economies are likely to boost EM bond ETF inflows as reflationary trend may hurt U.S. bond market.

Disinflation in Emerging Markets? Buy EM Bond ETFs

Invesco Ultra Short Duration ETF

Getting more than broad-based bond exposure doesn't mean investors have to deep dive into the debt market. They can start with three ETFs from Invesco that are seeing heavy average daily volume.

Looking For Bonds? 3 Prescient ETFs from Invesco

While yields might be creeping higher in benchmark U.S. Treasuries, it might not be enough to satiate fixed income investors' appetite. That said, it's a good time to seek yield in other parts of the world, such as emerging markets (EM), via the Invesco Emerging Markets Sovereign Debt ETF (PCY).

Can Emerging Markets Debt ETFs Satiate Your Yield Appetite?

News for Invesco Emerging Markets Sovereign Debt ETF ETF (PCY)