It is a passive bond ETF that tracks an index of dollar-denominated, below-investment-grade high-yield corporate bonds issued by emerging market companies. It diversifies across emerging market corporate bonds in pursuit of high distribution income.

It suits income-focused investors who seek high distribution income and are willing to accept the credit and country risks unique to emerging market corporate bonds.

It is an ETF managed by VanEck using a passive (index-tracking) approach.

It tracks an index of dollar-denominated, below-investment-grade high-yield corporate bonds issued by emerging market companies. By diversifying across high-yield corporate bonds from multiple emerging countries and industries, it pursues credit spread income. Because the bonds are dollar-denominated, the direct impact of local currency fluctuations is limited.

• Exposure to emerging market high-yield corporate bonds
• Dollar denomination limits the impact of local currency moves

Assets under management (AUM) stand at $506.5M, and the expense ratio is 0.40% per year.

Compared with the US high-yield ETFs HYG and USHY, the main points of comparison are investment region and credit and country exposure.

Emerging market high yield is heavily influenced by interest rates, credit spreads and global risk appetite. It tends to strengthen when risk appetite is strong and weaken when credit concerns grow. With emerging market country risk added, it tends to be more volatile than US high yield.

Fund flows into and out of emerging market high yield diverge sharply depending on global risk appetite, the strength of the dollar and the credit environment. Demand for high distribution income can also pull money into related products. It is also worth noting that performance can vary widely depending on emerging market policy and the credit environment.

High distribution income and emerging market credit exposure are its strengths, while credit and country risk, economic sensitivity and liquidity are considerations.

To broaden emerging market bond exposure to government debt, direct substitutes include emerging market sovereign bond funds such as EMB and PCY. For a different approach to emerging market high yield, products like EMHY are also worth comparing. To hold a broad range of emerging market government bonds, products like VWOB can also be considered. The three products shown in the table, HYG, USHY and SPHY, all track US high-yield corporate bonds, so their investment region differs. This ETF's differentiating factor is its narrower exposure to dollar-denominated emerging market high-yield corporate bonds.

Here are the points to review before investing in HYEM. High distribution income is attractive, but credit and country risk, economic sensitivity and liquidity should be checked in advance. It is also a good idea to compare it with US high-yield and emerging market sovereign bond products.

Emerging market issuer credit and country risk, along with wider credit spreads from a global economic slowdown, are the main short-term performance variables. In periods of market stress, tighter liquidity can lead to larger price swings. High distribution income comes with correspondingly high risk.

It is a suitable candidate for income investors who seek high distribution income and are willing to accept emerging market credit risk. If you want US high yield, consider products such as HYG and USHY. If you want exposure to emerging market high-yield corporate bonds, it is advisable to compare this product alongside them before choosing.