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Market Update

Emerging-Markets Bonds Are August's Fixed-Income Leader

We look at emerging-markets debt through the Morningstar Emerging Markets Bond Index.

As interest rates reach new lows, U.S. government and even corporate bond yields look bleak. To compensate, income-seeking investors are moving their money into riskier, higher-yielding debt--such as emerging-markets bonds. Among Morningstar fixed-income categories for funds, the emerging-markets-bond category was the best-performing in August, making it the monthly leader for the first time since June 2020.

Here, we explain more about emerging-markets bonds and some of the risks that investors may want to keep in mind.