The International Monetary Fund (IMF) forecasted in June that Gross Domestic Product (GDP) growth could hit 6.6% this year in developing economies -- roughly three times the growth of advanced economies. As tensions rise about what lawmakers should do about the U.S. debt ceiling, and projected economic growth for the United States at an anemic 2.5%, those looking to invest in bonds may want to consider emerging markets.

One way to invest in emerging markets is with the iShares JPMorgan USD Emerging Market Bond Fund (EMB), a fixed-income fund that seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the JPMorgan EMBI Global Core Index. The fund tracks the total return of actively traded external debt instruments in emerging market countries. The fund’s top holdings are based in countries such as the Philippines, Turkey, Russia and Brazil.

EMB generally has been on the increase since late February. Subscribers to my High Monthly Income newsletter have seen a 4.64% unrealized return in EMB, as of the close of trading Monday, compared to when I recommended it in late January. This gain is fueled partly by $2.71 per share in dividend payments that have been dished out during that time.

As you can see from the chart below, EMB trades above its 50- and 200-day moving averages. That situation indicates that EMB remains in a bullish trend. Although the price of EMB has risen significantly since I recommended it, breaking the $109 mark at the end of June, there is still quite a way to go before it reaches its Nov. 4 closing price of $114.13. As a result, there still could be significant room for gains.

 

As a bond ETF that pays a dividend every month, EMB is somewhat insulated from the volatility that afflicts other emerging market funds. Special-situation ETFs such as this one give investors an opportunity to take advantage of emerging market growth, without the heightened risk that accompanies investing in equities. Since bonds can be considered an income play, bond ETFs such as EMB offer up a great way to diversify your portfolio.

Finally, if you want my advice about buying and selling specific ETFs, including appropriate stop losses, consider subscribing to my ETF Trader service. As always, I am happy to answer your questions, so do not hesitate to email me by clicking here. You may see your question answered in a future ETF Talk.