- EMB is a large fund that provides investors exposure to Investment Grade and High Yield Emerging Market Sovereign bonds. Most Investors are income-seeking and risk-averse.
- Due to current and potential future macro outlook. EM Sovereign Debt could be repriced significantly in the next 3-24 months, with a 30-50% downside.
- Buy-and-hold investors of EMB, and similar funds should significantly reduce or eliminate exposure.
- Aggressive investors may consider stock replacement, shorting the ETF, or going long out-of-money puts.
For further details see:
EMB: Emerging Into Crisis, Potential For Heavy Asymmetric Losses