For example, the Market Vectors Emerging Markets Local Currency Bond (EMLC) ETF is down 7.8% year-to-date.
For local currency bond holders, Brazil offers some of the best investment grade yield around.
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He holds emerging market equities through the Vanguard MSCI Emerging Markets Index (VWO) ETF and emerging market local currency bond funds.
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Future local currency bond issues in Brazil are going to pay a lot less in interest than they have in several years.
On July 23rd the firm introduced Market Vectors Emerging Markets Local Currency Bond ETF ( EMLC), a fund whose name describes exactly what it does.
However, the correlation between flows into hard-currency bond funds and both local-currency bond funds and equity funds has decreased significantly lately, while the correlation between EM equity fund flows and EM local-currency bond fund flows has trended higher.
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The Market Vectors Local Currency EM Bond (EMLC) fund is down 1.4% by comparison.
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Indian banking stocks surged after Moody's unified India's foreign and local currency government bond ratings at Baa3 and left ratings of government-related issuers unchanged.
To get a sense of what Brazil yields are like, the January 2015 local currency government bond yielded 12.8% in the March 17 Brazilian Treasury auction.
As a result, both local and hard currency bond funds continue to see the bulk of the inflows as investors consider them to be the safer bet over equities.
The iShares 3-7Yr UST (IEI) exchange traded fund is up 6.68% while the Market Vectors Emerging Markets Local Currency (EMLC) bond ETF is up just 1.62%.
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But most of the investors choosing emerging market debt are buying bond funds with local currency debt, rather than buying the sovereign or quasi-sovereign dollar denominated bonds that foreign countries like Brazil also issue.
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Oppenheimer mutual fund bond manager Sara Zervos likes local currency emerging market bonds.
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The local currency hit a 10-month low and bond prices fell to their lowest in two weeks as markets were expecting the Reserve Bank of India to cut its policy lending rate at its June 17 meeting to help boost economic growth that has slowed to its weakest pace in a decade.
The local currency is also hit by concerns that the U.S. may reduce its bond-purchase program, which has emerged as a key source of funds for investments in emerging markets such as India.
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