As emerging markets continue their fiscal dominance over their developed market counterparts, EM bonds are increasingly reaping the benefits.

The global balance has quietly inverted. Before 1998, emerging markets (EM) ran chronic external deficits and were the epicenter of 1990s crises. After 1998, developed markets (DM) took up that mantle—running large, persistent deficits and driving the major crises of the new millennium. The difference is policy. EMs generally have lower levels of government and/or total economy debt. This allows central banks independence to focus solely on inflation and not be constrained by concerns about undermining government financing. As they are independent, EM central banks can maintain high real policy rates that keep market rates attractive versus those of DM countries. In addition, we think DMs are generally facing headwinds from geopolitical developments, while many EMs are experiencing tailwinds from geopolitical developments.

In a recent webinar, VanEck’s Eric Fine discusses this fiscal dominance of emerging market countries and explains why the emerging market debt asset class is the beneficiary of this new world order.

Webinar Replay

Watch the replay, which gives insights into emerging market dynamics and opportunities. Access the recording with passcode: aM96kgz%

Key takeaways from the webinar include:

• Fiscal dominance – Since the late 1990s, the roles of developed and emerging markets have flipped: EMs internalized hard lessons, tightened policy, and ran surpluses; DMs increasingly ran large deficits and engineered crisis responses that fused monetary and fiscal policy.
• Geopolitics favor EM – Geopolitics and reserve diversification are pushing capital toward surplus-running EMs and higher-yielding EM local bonds, creating a structural tailwind for emerging market bonds.
• Recent EM debt outperformance and the power of active management – While fundamentals increasingly favor emerging markets, the opportunities swing by country, currency, and cycle, which makes a blended active approach key.

How to Invest

The VanEck Emerging Markets Bond ETF was one of the first blended emerging markets bond strategies in the market. The strategy adopts a comprehensive approach, investing across the entire EM bond spectrum to maximize opportunity and manage risk in a complex global environment. Despite global disruptions such as the COVID pandemic, the war in Ukraine and economic troubles in China, the fund has historically outperformed both global and U.S. bond benchmarks. VanEck’s active strategy, which focuses on fundamental value relative to bond risk premia, aims to capitalize on these shifts and avoid troubled issuers, making a compelling case for a diversified, actively managed EM bond allocation.

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By Eric Fine, Portfolio Manager, Active Emerging Markets Debt

Originally published October 13, 2025

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Emerging Market securities are subject to greater risks than U.S. domestic investments. These additional risks may include exchange rate fluctuations and exchange controls; less publicly available information; more volatile or less liquid securities markets; and the possibility of arbitrary action by foreign governments, or political, economic, or social instability.

The Fund’s benchmark index (50% GBI-EM/50% EMBI) is a blended index consisting of 50% J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified and 50% J.P. Morgan Emerging Markets Bond Index (EMBI). The J.P. Morgan GBI-EM Global Diversified tracks local currency bonds issued by Emerging Markets governments. The J.P. Morgan EMBI Global Diversified tracks returns for actively traded external debt instruments in emerging markets, and is also J.P. Morgan’s most liquid U.S dollar emerging markets debt benchmark.

An investment in the VanEck Emerging Markets Bond ETF may be subject to risks which include, among others, risks related to active management, credit, credit-linked notes, currency management strategies, derivatives, emerging market issuers, ESG investing, foreign currency, foreign securities, hedging, high portfolio turnover, high yield securities, interest rate, market, non-diversified, operational, restricted securities, investing in other funds, sovereign bond, special risk considerations of investing in African, Asian, and Latin American issuers, authorized participant concentration, no guarantee of active trading market, trading issues, fund shares trading, premium/discount and liquidity of fund shares, and cash transactions risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.

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