Emerging Markets Bond ETF GEMD Outperforming the Category

2025 has seen foreign investing opportunities boost portfolios considerably. The spring “Liberation Day” tariffs gave foreign equities a big boost, and many international equities have continued to perform for the rest of the year. That foreign market performance isn’t limited to equities, however; ex-U.S. bonds have also offered plenty of opportunity for investors. The Goldman Sachs Access Emerging Markets USD Bond ETF (GEMD), for example, has performed well YTD, standing out in its category.

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GEMD charges a 39 basis point fee for its approach. The fund tracks a market value-weighted index of U.S dollar-denominated emerging markets bonds. The index includes emerging markets bonds of varied maturity and credit quality. 

Specifically, its index operators look for bonds based on economic factors like governance indicators and inflation. The index starts with the most liquid government-sponsored or sovereign-guaranteed bonds from the FTSE Emerging Markets Broad Bond index. A fundamental screen removes bonds from low-ranked countries, as well, to limit exposure to questionable bonds. 

Together, that has helped the emerging markets bond ETF return 5.7% over the last three months, beating its three-month ETF Database Category average in that time. Looking ahead, then, why might an emerging markets bond ETF like GEMD be worth consideration? 

For one, this year’s major decline in the value of the U.S. dollar may not be over on December 31. Continued decline for the dollar, as well as domestic interest rate uncertainty, may see emerging markets debt appeal by comparison. Leaning on Goldman Sachs Asset Management’s investment capabilities, the fund could continue to outperform in the new year.

A shifting rate environment likely has many investors looking at their portfolios and considering changes. Domestic uncertainty, including a potentially less independent Federal Reserve, may speak to the merit of fixed income diversification.

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