Emerging Markets Bond Index - EMBI

AAA

DEFINITION of 'Emerging Markets Bond Index - EMBI'

A benchmark index for measuring the total return performance of international government bonds issued by emerging market countries that are considered sovereign (issued in something other than local currency) and that meet specific liquidity and structural requirements.

The most popular indexes are the J.P. Morgan Emerging Bond Index (EMBI) and EMBI+; the latter measures both Brady bonds and other sovereign debt while the EMBI measures only Brady bonds. In order to qualify for index membership, the debt must be more than one year to maturity, have more than $500 million outstanding, and meet stringent trading guidelines to ensure that pricing inefficiencies don't affect the index.

INVESTOPEDIA EXPLAINS 'Emerging Markets Bond Index - EMBI'

The J.P. Morgan indexes are a popular benchmark for money managers that deal in emerging market debt, so investors may see the index used as a comparison for their mutual funds or exchange-traded funds. Because of their higher interest rates, emerging market bonds can significantly outperform U.S. Treasury bonds. For example, in the 10-year period ending in May of 2004, the J.P. Morgan Global Emerging Markets Bond Index had a total return of 248%, greater than both U.S. corporate bonds and the S&P 500.


RELATED TERMS
  1. Emerging Market Fund

    A mutual fund or exchange-traded fund that invests the majority ...
  2. Junk Bond

    A colloquial term for a high-yield or non-investment grade bond. ...
  3. Par

    1. The face value of a bond. Generally $1,000 for corporate issues, ...
  4. Brady Bonds

    Bonds that are issued by the governments of developing countries. ...
  5. Sovereign Bond

    A debt security issued by a national government within a given ...
  6. Surrender Period

    The amount of time an investor must wait until he or she can ...
Related Articles
  1. Here we look at the major fund categories that exist for investors seeking international opportunities, as well as the advantages and disadvantages of these funds.
    Investing Basics

    Broadening Your Portfolio's Borders

  2. Economics

    What Is An Emerging Market Economy?

  3. Active Trading

    The Advantage Of Intermarket Analysis

  4. Options & Futures

    An Introduction To Emerging Market Bonds

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center