In emerging markets, relative yields rose for a second day, climbing 5 basis points to 346 basis points, or 3.46 percentage points, according to JPMorgan Chase & Co.'s EMBI Global index. The guage has averaged 376 basis points this year.
With the Federal Reserve saying economic conditions will probably warrant interest rates remaining near zero through at least 2014, ETFs are gaining in popularity with individuals seeking higher-yielding investments. European speculative-grade debt is yielding an average of 8.4 percent, versus a 7.3 percent yield on comparable debt in the U.S., Bank of America Merrill Lynch index data show.
"There's a growing universe of high-yield debt globally," said Francis Rodilosso, an investment manager at Van Eck Associates Corp. "With the advances of the ETFs and more people getting exposure to high-yield debt, it made sense to create an alternative way for people to seek higher-yielding assets."
ETFs, which drew congressional scrutiny last year as more complex and riskier versions emerged, allow individual investors to speculate on debt ranked below investment grade without owning the bonds. Unlike mutual funds, which have shares that are priced once a day, ETFs are listed on exchanges and bought and sold like stocks.
Market Vectors's International High Yield Bond Fund ETF will track an index of speculative-grade debt sold by companies throughout the world, including emerging markets, according to a prospectus filed on March 29.
High-yield bond ETFs recorded $6.9 billion of U.S. inflows during the first three months, compared with $1.9 billion of inflows in the comparable period in 2011, according to data compiled by London-based ETF Global Insight. Global inflows have totaled $7.9 billion so far this year, the data show.
Yields on U.S. high-yield bonds are within 0.5 percentage point of the record low of 7.19 percent reached in May 2011, Bank of America Merrill Lynch index data show. The debt has lost 0.1 percent since the end of February amid concern that Europe's debt crisis may be escalating.
BlackRock's global junk-bond ETF aims to invest at least 40 percent of its assets in companies located or doing business outside the U.S., according to a prospectus filed on March 29.
The fund which won't try to beat the index it tracks or position itself defensively when markets decline or appear overvalued, will charge a management fee of 0.55 percent and be overseen by James Mauro and Scott Radell, the document said.
While passive management "may eliminate the chance that the fund will substantially outperform the underlying index," it "may reduce some risks of active management, such as poor security selection," according to the prospectus.