What is the '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.

BREAKING DOWN '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. International Bond

    Debt investments that are issued in a country by a non-domestic ...
  2. Brady Bonds

    Bonds that are issued by the governments of developing countries. ...
  3. Benchmark Bond

    A bond that provides a standard against which the performance ...
  4. Sovereign Bond Yield

    Sovereign bond yield is the interest rate paid on a government ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
  6. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
Related Articles
  1. Investing

    Top 5 Emerging Market Bond ETFs (EMB, EBND)

    The high growth potential of emerging markets makes these five ETFs popular among risk-tolerant investors.
  2. Investing

    Top 3 Emerging Markets Bonds ETFs (PCY, VWOB)

    Read about three of the best ETFs for exposure to emerging markets debt, which tends to be higher-yielding than bonds in developed countries.
  3. Investing

    Plenty of Enthusiasm for EM Bond ETFs

    Bond investors looking for some extra yield should turn to emerging markets sovereigns.
  4. Investing

    6 Popular Global Bond ETFs in 2016 (EMB, BNDX)

    Discover some of the most popular global bond ETFs, as measured by assets under management, including the investment exposure each ETF offers.
  5. Investing

    Spice Up Your Portfolio With International Bonds

    Going global can add flavor and diversity to an otherwise bland basket of bonds.
  6. Investing

    Top 4 International Treasury Bond ETFs (BWX, EMB)

    Learn about the top four international treasury bond funds that hold sovereign foreign bonds, which can be denominated in U.S. dollars and local currencies.
  7. Investing

    EMB: iShares JPMorgan USD Emerg Markets Bond ETF

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  8. Investing

    Invest In Emerging Market Bonds With These ETFs

    With the variety of emerging market bond ETFs now on the books, it's become far easier for investors to diversify. Here's a look at a few options.
  9. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  10. Investing

    ETFs Meet Their Waterloo

    Emerging markets bond ETFs give investors unique access, but these funds aren't perfect.
RELATED FAQS
  1. What forms of debt security are available for the average investor?

    Discover the various different types of debt securities, issued by government entities or corporations, that are available ... Read Answer >>
  2. Why are simple-interest loans preferred by payday loan companies and pawn shops?

    Learn how you can invest in the corporate bond market without investing a large amount of capital through bond funds and ... Read Answer >>
  3. Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  3. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  6. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
Trading Center