It is a passive bond ETF that diversifies across government bonds issued by multiple emerging market governments in their own currencies. By holding local currency government bonds from emerging markets, it gives exposure to interest rate and currency trends that differ from those of US bonds.

It suits investors who want the high interest income and currency diversification of emerging market bonds and are willing to accept exchange rate risk.

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

The fund tracks an index made up of government bonds issued by multiple emerging market governments in their own currencies. Through direct holdings and derivatives, it gains diversified exposure to local currency government bonds, holding bonds above a certain credit rating and with a minimum maturity so as to follow the emerging market bond market as a whole.

• Currency diversification through local currency government bonds from many emerging markets
• Exposure to interest rate and currency trends that differ from US bonds

Assets under management (AUM) are $770.5M, and the total expense ratio is 0.30% per year.

Unlike emerging market dollar-denominated bonds, investing in local currencies provides currency diversification, but it also means directly bearing the risk of local currency exchange rate swings.

Emerging market local currency bonds react sensitively to each country's interest rates, currency trends and the strength or weakness of the dollar. They can show relative strength when the dollar is weak or appetite for emerging market risk is strong, but in periods of dollar strength or risk aversion, currency weakness can deepen losses.

Money tends to flow into local currency bond ETFs when the dollar weakens and risk appetite for emerging markets rises, and it can leave quickly when the dollar strengthens or risk aversion intensifies.

Its strengths are the high interest income and currency diversification of emerging market bonds, while its weaknesses are local currency exchange rate swings and credit risk.

Among those in the table, EMB and similar funds invest in government bonds issued by emerging markets in dollars, making them direct alternatives with relatively smaller exchange rate swings, while GOVT, SHV and similar funds are US Treasury ETFs with a different character. To invest further in emerging market local currency bonds, you can also compare EMLC, which holds local currency government bonds, and, if you want diversification across emerging market government bonds, VWOB. These funds differ in denomination currency, credit composition and fees, so it is best to choose according to your risk tolerance.

These are the points to review before investing in LEMB. As an emerging market local currency bond ETF, it is important to check currency exposure, credit risk, volatility and fee levels together in advance.

When local currencies weaken, bond returns can be eroded by currency losses, and credit risk tied to emerging market fiscal conditions and price volatility are also significant. Losses can widen during periods of dollar strength.

It is a passive ETF suited to investors who want the high interest income and currency diversification of emerging market bonds and are willing to accept exchange rate risk. To reduce currency swings, an emerging market dollar bond ETF can be an alternative, while for those who prioritize currency diversification, LEMB can be the alternative.