Firms Staff Up EM Bond Desks as Demand Grows
Emerging market bond ETFs are drawing increased institutional interest, prompting asset managers to staff up with specialized teams. Allspring Global Investments became the latest firm to make such a move this month, acquiring a team from GIA Partners to manage $1.1 billion in emerging market assets, according to Pensions & Investments reporting.Key Takeaways:
Major firms added EM bond teams as institutions allocated $1.5 billion.
EMB gained 13.38% and EMLC returned 12.86% over the past year through April 24.
The funds offer hard currency sovereign, local currency, and corporate credit exposure.
The hiring wave comes as emerging market debt outpaced domestic fixed income over the past year, with investors seeking exposure beyond U.S. policy uncertainty and concentration in artificial intelligence-driven equities.
Allspring wasn’t alone in adding expertise to the space. PPM America and Lazard Asset Management made similar moves in 2025, building dedicated emerging market bond teams, according to Pensions & Investments. The $283.8 billion Florida State Board of Administration allocated $1.5 billion across three emerging market bond managers last year.
Those allocations came alongside strong performance for the asset class. The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB A-) gained 13.4% over the past year through, while the VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC A+) returned 12.9%, according to ETF Database. Meanwhile, the iShares J.P. Morgan EM Corporate Bond ETF (CEMB B+) posted an 8.9% return over the same period.EM Bond ETFs With Different ApproachesThe largest of the three by assets, EMB tracks USD-denominated sovereign debt from emerging market governments. The fund holds $14.6 billion in assets with a 0.39% expense ratio, according to ETF Database. The fund holds 682 bonds across more than 70 countries, with top exposures in Saudi Arabia at 6.3%, Mexico at 6.2% and Turkey at 4.7%, according to the fund’s factsheet as of March 31.
The index also includes quasi-sovereign entities, which are defined as those that are 100% guaranteed or owned by national governments, according to the fund’s prospectus. Eligible bonds must have at least $1 billion in outstanding face value and a minimum of 2.5 years to maturity.
By contrast, EMLC focuses on bonds issued in local currencies rather than dollars, providing exposure to currency movements alongside bond returns. The fund holds $5 billion across 490 bonds with a 0.30% expense ratio, according to ETF Database. Top country exposures include China at 9.3%, Malaysia at 8.2% and India at 8.2%, according to the fund’s factsheet as of March 31.
Because the fund’s assets are denominated in foreign currencies, the fund’s exposure to changes in the value of foreign currencies versus the U.S. dollar may result in reduced returns, according to the fund’s prospectus. The fund uses a sampling methodology rather than holding all bonds in its index.CEMB's Alternate ApproachTaking a different approach, CEMB targets corporate issuers in emerging markets rather than government bonds. The fund holds $388.9 million across 1,122 securities with a 0.50% expense ratio, according to ETF Database. The fund’s portfolio breaks down to 93.2% government activity and 6.8% financials, according to the fund’s factsheet as of March 31.
Bonds are eligible if the issuer is headquartered in an emerging market country, the issue is 100% guaranteed by an entity within an emerging market economy, or 100% of the issuer’s operating assets are located within emerging markets, according to the fund’s prospectus. The index includes both investment-grade and non-investment-grade bonds.
Jon Baranko, CIO of Allspring Global Investments, told Pensions & Investments that emerging market debt markets are “inefficient,” creating opportunities for active managers. The specialized team additions position asset managers to meet institutional demand as allocators look for portfolio building blocks beyond domestic markets.
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