EMB holds bonds from emerging markets. Some of the countries it buys bonds from, like Iraq and Kazakhstan, may be more commonly considered frontier markets. But the bonds have high coupons, and EMB generates steady monthly income.

Intro

The EMB fund,

maintained by BlackRock Investments,

tracks an index. This index is the JP Morgan EMBISM Global Core Index. I read about the goal of this index. The index is actively maintained and may change each month.

The index is a broad, diverse US dollar denominated emerging markets debt benchmark which tracks the total return of actively traded external debt instruments in emerging market countries.

Holdings

The holdings of EMB are bonds issued by countries like the Philippines, Russia,

Turkey,

Lithuania

and Poland. The coupons of these bonds is often been 5.00 and 8.50. These are high-yielding bonds.

Searching through the list of countries issuing bonds, I find Iraq and even countries like South Africa. The definition of emerging markets excludes Western Europe, USA, and Australia.

But: Often countries like South Africa are not emerging markets. And countries like Cote d’Ivoire are frontier markets.

Story

EMB has been a fund that has attracted my attention. Offered for no commission at Fidelity Investments, it offers a high monthly payout. This money is automatically added to your account each month.

And: Investing in countries like Iraq, through bonds, is exciting in the suburban boredom of New York.

However: EMB offers little potential for growth. It might even lose value. The extra income is not without risk.

I decided that for me, and for many investors, a stock ETF is a better choice overall. It might even carry less risk. In the current interest environment (where rates are rising), bond funds can lose money.

However, for the bond part of your diversified portfolio, a few shares of EMB may be worth holding. They will increase your monthly income, which you can regularly reinvest. But EMB should not be a core holding.

Summary

EMB, like all investments, has risk. It may drop in price depending on the market environment. Ignoring these temporary price fluctuations, and you are left with a stable and secure, significant monthly income.