iShares J.P. Morgan EM Local Currency Bond ETF [LEMB] Stock Forecast

The most widely followed emerging markets' local currency benchmark will undergo its biggest reconstitution since China's inclusion in 2020, when India joins the index next year. India has the second largest bond market among emerging markets, second only to China, and is rated investment grade by all major rating agencies.

Emerging markets are an attractive option for investors looking to diversify their portfolios. They offer the potential for higher returns and lower correlation with U.S. equities.

Central banks across emerging markets have reacted to elevated inflation by significantly tightening monetary policy, in some cases, well ahead of the U.S. Federal Reserve and the European Central Bank. After largely synchronized rate-hiking cycles across EM, monetary policies could once again begin to diverge among individual countries.

In emerging markets valuations look attractive today after the losses across financial markets early this year. PIMCO's investment process is founded upon our macroeconomic outlook and our in-house country and credit research.

The latest sanctions on Russia's central bank are leaving custodians with tough questions.

Performance of emerging markets local currency bonds has been negatively impacted by the U.S. dollar's strength since mid-year, despite the higher real yields and upside growth surprises in many emerging markets. Currency returns can be volatile, and external factors can have a bigger short-term impact on an emerging markets currency (EMFX) even if relatively attractive fundamentals may provide longer-term support.

Emerging markets offer attractive alternatives to fixed income investors searching for yield amid the trillions of dollars of negative-, zero-, and low-yielding debt globally. Within emerging market hard currency investment grade bonds, we think it is prudent to be shorter duration or at least hedge the Treasury risk component, given the low yield per unit of duration today.

Past experience shows us that emerging markets have historically reacted positively to higher global rates, especially if the latter reflects an improving global growth outlook. Most emerging markets will start normalizing rates well before the U.S. and developed markets.

We do not expect faster growth to lead to a significant deterioration in most macro variables. The huge amount of negative-yielding debt globally will likely continue to encourage investors to increase allocations to emerging markets.

Today, China's economic recovery continues ticking along, and we are even seeing some indicators showing growth relative to last year.

iShares J.P. Morgan EM Local Currency Bond ETF is a US stock and trading under the symbol LEMB

iShares J.P. Morgan EM Local Currency Bond ETF stock price is $36.12 today.

Yes, iShares J.P. Morgan EM Local Currency Bond ETF is a publicly traded company.