EM Debt Could Be 2026 Fixed Income Star

In the market, leadership can fluctuate from year-to-year. However, it’s possible for winning segments to repeat the feat for two (or more) consecutive years. Some experts believe the scenario outlined above could play out next with emerging markets debt, indicating the Neuberger Berman Emerging Markets Debt Hard Currency ETF (NEMD) is a bond ETF to keep an eye on in 2026.

Indeed, the actively managed NEMD turned in an impressive 2025 showing. As of Dec. 8, the ETF is higher by 16.36% year-to-date. Additionally, NEMD accrued that performance against the backdrop of geopolitical volatility and the Trump Administration’s tariff efforts.

NEMD Could Again Benefit from 2025 Catalysts in 2026

Understanding why emerging markets bonds and ETFs like NEMD performed so well this year is relevant. That understanding can provide clues regarding what 2026 may have in store for the asset class.

“This was driven by good fundamentals across emerging markets, credible central bank policy and growth that has continued to be resilient while we saw the macro backdrop being quite challenging at times. Parallel to that was emerging market economies being driven by their own targets and metrics, an independent easing policy coupled with strong fundamentals,” noted Alaa Busheri of BNP Paribas.

Obviously, NEMD doesn’t feature massive allocations to US-issued debt. Still, events in this country are likely to affect the ETF next year.

“We have a Fed chair who is on his way out and a new [rate-setting] committee for us to follow next year. The question here is will the Fed decide to cut [rates]regardless of the availability of data, the quality of the data,” added Busheri.

The good news for NEMD is that emerging markets economic and financial market fundamentals are sound, broadly speaking. Additionally, investors are enthusiastic for bonds from commodities-exporting countries. The NEMD portfolio contains plenty of those.

“We do have the positive fundamentals. We see a monetary easing policy being supportive for performance next year. We expect the dollar to remain range-bound, and we have resilient and positive global trade and that’s growing between the EM countries,” concluded Busheri. He added, “We expect stronger regionalisation to continue supporting EM economies. Commodity prices have been supportive as well, benefiting exporters.”

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