Vanguard Emerging Markets Government Bond Index Fund (VWOB)

I hope you enjoyed a great July, whether you were on vacation or not. I've been catching up on the fantastic content our team at ETF Trends and ETF Database produced in July 2025.

I believe the macro environment in 2025 favors emerging market bonds, making Vanguard Emerging Markets Government Bond ETF interesting despite U.S. trade war rhetoric. I believe it's a very representative ETF for the emerging market space, even compared to more widely used ETFs like EMB. Despite President Donald Trump's tariff threats, VWOB has outperformed Treasuries, making the comparison with AGG particularly interesting.

As the prospect of rate cuts becomes more plausible, the buzz surrounding EM becomes more audible. That interest is also permeating into the bond markets for emerging market debt.

Exchange-traded funds (ETFs) are sort of like ice cream: There's a flavor that should appeal to every person.

Tariffs, inflation, geopolitical tensions, and other factors continue to feed into market uncertainty for even safe haven assets like Treasuries. As such, investors could be giving riskier emerging market (EM) bonds a second look.

Emerging market bonds offer investors particularly attractive yields, with the highest historical spreads in the market. VWOB is a simple index ETF investing in these securities. It has a good 6.3% yield, consistently outperforms its peers with moderate risk, and is a buy.

Tariffs could be making investors wary of assets in developed countries; namely, Canada, Mexico, and the U.S. of course. This, however, means emerging market (EM) assets like bonds could garner interest.

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2024 was a lackluster year for emerging market bonds. But they were still able to draw some interest from investors.

The asset manager said this is its biggest fee cut ever and will save investors about $350 million this year.

Bond issuance hit records in 2024. History could repeat itself this year, especially regarding emerging market (EM) bonds.

A persistently strong U.S. dollar tempered the gains for emerging markets (EM) assets in 2024. But investors were still attracted to the riskier corners of the EM bond market.

With a new U.S. presidential administration coming in 2025, the uncertainty of the impact on emerging markets (EM) assets appears to be causing investors to head for the exits on EM equities. Bonds, on the other hand, appear to remain resilient.

Improving fundamentals are emboldening institutional money managers to take on more emerging market bonds. In a true sign of a risk-on sentiment, these managers are adding the riskiest of bonds in EM countries.

Emerging market (EM) assets are benefiting from a post-election rally as investors are now more clear on what the incoming presidential administration will look like. In the meantime, if emerging market assets continue trending higher, consider bond exposure.

International bonds offer ingress into debt issue diversification overseas, but some caution is warranted given that a U.S. election is forthcoming. As such, it may be best to stick with developed markets, but the bold can always consider emerging markets to appease their risk appetite.