Have Emerging-Markets Bond Funds Emerged?

Yahoo! Emerging Markets F2Es (Photo credit: Gopal Venkatesan)

Emerging markets are hot. But while emerging-markets equity funds took in the bulk of their new assets during the stretch between late 2008 and early 2011, flows into emerging-markets bond funds have remained strong thus far through 2012. The category took in more than $10.6 billion through June, putting it well ahead of the already torrid pace of flows it experienced in 2010 and 2011. With more than $60 billion in total net assets, the category is now more than 3 times as large as it was in mid-2008.
The trend hasn't been limited to dedicated emerging-markets portfolios, either. Managers of intermediate-term bond funds--which often form the core of investor portfolios--have been more likely to hold some assets in emerging-markets debt than ever before. The trend isn't universal, but the highest-profile examples are notable. The industry's largest fund, the $263 billion PIMCO Total Return(PTTRX), held 8% in the sector as of June, for example (a weighting that alone equates to one third of the emerging-markets bond category), while American Funds' $33 billion Bond Fund of America(ABNDX) recently boasted a 4.7%  ... Continue to read.

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