Following average annual returns of 15.3 percent in the four years ended last December, dollar-denominated emerging markets notes have lost 6.8 percent this year, according to Bank of America Merrill Lynch index data. That compares with a 2.9 percent loss in 2013 on the Bank of America Merrill Lynch U.S. Corporate & High Yield index.

“Developed markets paper has held in much better than emerging markets paper,” said Stephen Antczak, the head of U.S. credit strategy at New York-based Citigroup Inc., the second- biggest underwriter of emerging-market bonds. “What worries me is if you don’t have this natural support in place, you could get a disproportionate selloff in emerging markets.”

Avoiding India

Investors are withdrawing more cash from developing nations’ bonds after pouring $58.8 billion last year into funds that buy the debt, EPFR data show. Emerging-market debt was seen as a haven with higher-yielding securities amid a U.S. stimulus program that’s funneled more than $2.6 trillion into the financial system since September 2008.

Yields on the Bank of America Merrill Lynch U.S. Emerging Markets External Debt Sovereign and Corporate Plus index have climbed to 5.73 percent after reaching an all-time low of 4.04 percent on Jan. 24.

The gap in yields with U.S. company debt widened to as much as 1.44 percentage points on Aug. 31, the most since reaching 1.47 percentage points on Dec. 1, 2008.

The $22.1 billion of outflows from emerging-market debt funds in the past four months compare with $4.6 billion of withdrawals from U.S. corporate bond funds, EPFR data show.

Asian economies have been among the hardest hit. A JPMorgan index of Indian dollar-denominated bond yields touched 6.525 percent on Sept. 5, the highest since January, with BNP Paribas SA forecasting economic growth of 3.7 percent through next March, compared with a 10-year average of about 8 percent.

Fed Meeting

India is “one country we’re completely avoiding and have been doing so for 12 months,” said Hayden Briscoe, a Hong Kong- based director of Asia-Pacific fixed-income at AllianceBernstein Hong Kong Ltd.