Foreign stocks have been getting attention lately, but international bonds, especially emerging market bonds, have also been performing well. Factors like U.S. dollar weakness, concerns about the fiscal health of the U.S., and President Trump’s foreign policy are driving increased interest in diversifying internationally.

The iShares JPMorgan USD Emerging Markets Bond ETF (EMB) and BondBloxx’s JP Morgan USD Emerging Markets 1-10 Year Bond ETF (XEMD) both saw strong returns in 2025. Despite fears of a private credit bubble, the U.S. remains a strong fixed income market with opportunities for investors to continue investing.

While U.S. investors are not abandoning the domestic market, they are also adding assets overseas. In January, U.S. market ETFs had record inflows, but international equity ETFs and taxable bond ETFs also saw significant inflows. Investors are expanding their portfolios while keeping U.S. assets at the core.

Investors no longer need to stretch for yield, as opportunities exist in investment-grade credit and moving out on the rate spectrum to BBB. Bonds are seen as not just a defensive tool but also an opportunity for income. As central bank interest rates drift lower, more capital is expected to move into the credit markets and bonds.

Read more at CNBC

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