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2 Free-Ranging Emerging-Markets Bond Funds

TCW Emerging Markets Income and T. Rowe Price Emerging Markets Bond have used their ability to invest in dollar and local currency bonds wisely.

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Karin Anderson: Emerging-markets bond funds are off to a strong start so far in 2017. Many of them are up in the midsingle digits for the first four months of the year. 

There are two general types of EM bond funds: those that focus on hard currency, which are typically dollar-denominated issues, and those that focus on local currency bonds, which are denominated in emerging-markets currencies. In 2016, Morningstar separated out local currency EM bond funds into their own category, which makes a good deal of sense because those funds carry a great deal of currency risk and also rate risk, compared to those hard currency EM bond funds that primarily a credit risk that you are going to add to your portfolio.

Karin Anderson has a position in the following securities mentioned above: TGBAX. Find out about Morningstar’s editorial policies.