Short interest for iShares J.P. Morgan EM High Yield Bond ETF gives investors a sense of the degree to which investors are betting on the decline of iShares J.P. Morgan EM High Yield Bond ETF's stock. Short interest data is updated every two weeks.

iShares J.P. Morgan EM High Yield Bond ETF (BATS:EMHY), Short Interest Report

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Here&#39;s What Bonds Yielding Over 37% Do To An ETF

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Credit Downgrade Could Be Next Problem For Indonesia ETFs

iShares MSCI Turkey Investable Market Index Fund

Battered Turkey ETF Offers Discounts 

Seasoned emerging markets investors (and sadists for that matter) might get a kick out of wondering what a dedicated, equity-based Venezuela exchange traded might look like as the South American nation is ravaged by hyperinflation and a tumbling bolivar.

	Fixed income investors do not have to wonder how Venezuela&#39;s jaw-dropping sovereign debt yields affect bond ETFs because some bond funds trading in the United States have exposure to the country&#39;s sagging debt. On Wednesday, Venezuelan one-year notes closed with a yield of over 66.5 percent, according to <a href="http://www.investing.com/rates-bonds/venezuela-government-bonds">Investing.com</a> data.

	The $223.7 million iShares Emerging Markets High Yield Bond ETF (BATS: EMHY) has a 5.8 percent weight to Venezuelan bonds, making the country the ETF&#39;s fifth-largest geographic weight. EMHY allocates a combined 68.5 percent of its weight to bonds with maturities ranging from five to 15 years. In Venezuela, such bonds yield over 37 percent and 27 percent, respectively.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5795203/buying-the-dip-with-japan-etfs">Buying The Dip With Japan ETFs</a>

	Recent research from Bank of America Merrill Lynch shows credit default swaps (CDS), the instruments used by traders to protect against and profit from issuer default, on Venezuelan debt approaching 5,000 basis points. That is more than double comparable CDS for <a href="http://emergingequity.org/2015/08/18/a-look-at-the-worlds-riskiest-sovereign-debt/">Greek and Ukraine bonds</a>.

	Venezuela, Latin America&#39;s largest oil producer and a member of the Organization of Petroleum Exporting Countries, is part of the reason why EMHY has a 30-day SEC yield of almost 7.7 percent.

	To be fair to Venezuela, the country is not EMHY&#39;s only problem child. Actually, Venezuela is not even EMHY&#39;s Latin American problem child. Brazil, a country flirting with losing its investment-grade credit rating, on the brink of bankruptcy Argentina and Mexico combine for almost 18 percent of the ETF&#39;s weight. Six of the 10 country&#39;s with highest CDS rates according to Bank of America Merrill Lynch are found on EMHY&#39;s roster.

	The 344 bonds held by EMHY are denominated in U.S. dollars, which is problematic at a time when emerging markets currencies, including Russia&#39;s ruble, Brazil&#39;s real, Turkey&#39;s lira and Indonesia&#39;s rupiah, are plunging against the dollar. Those are EMHY&#39;s four largest country weights, combining for over 51 percent of the ETF&#39;s weight.

	Then there EMHY&#39;s to countries that have recently devalued their currencies, including <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5781305/kazakhstan-currency-devaluation-has-unexpected-etf-impact">China and Kazakhstan</a>. Those two countries combine for 6.25 percent of EMHY.

	But even with all those headwinds, EMHY is down just 3.4 percent year-to-date, a performance that is only modestly worse than that turned in by the iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>). EMHY has also sharply outperformed the MSCI Emerging Markets Index while offering a yield nearly triple that of the equity benchmark.

Here's What Bonds Yielding Over 37% Do To An ETF

The iShares MSCI Indonesia ETF (NYSE: <a class="ticker" href="/stock/eido#NYSE">EIDO</a>) and the Market Vectors Indonesia ETF (NYSE: <a class="ticker" href="/stock/idx#NYSE">IDX</a>) have $453.8 million and $294.8 million in assets under management, respectively. These are not tiny ETFs hurting for attention.

	As the largest ETFs tracking the world's fourth-largest nation by population and Southeast Asia's biggest economy, EIDO and IDX are not hurting for attention. Well-documented have been the startling declines in Indonesian stocks and the country's currency, the rupiah, since May when talk of Federal Reserve tapering escalated. Those declines represent a sharp reversal of fortune from the early part of this year when the ETFs soared and Indonesia was considered a possible replacement for India <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/06/2658878/india-one-foot-out-the-door-of-the-brics-house-epi-pin-s">in the famous BRIC acronym</a>.

	Related: <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/06/3650986/asias-former-darling-etfs-hemorrhage-cash">Asia's Former Darling ETFs Hemorrhage Cash</a>.

	Living in the here-and-now, the rupiah dipped 0.9 percent to four-year lows at 10,475 per dollar during Monday's Asian session, helping send the Jakarta Composite down 4.5 percent at this writing at about 3:00 am EST in the U.S. Yields on 10-year Indonesian sovereign bonds jumped 25 basis points to 8.37 percent. That is a 52-week high and roughly 300 basis points higher than the yield at the start of this year.

	Indonesia's borrowing costs could increase in the even of a sovereign ratings downgrade. There are no guarantees a downgrade will materialize, but ruling such an event out would be fool hardy. Although little or no recent coverage of Indonesia ETFs has mentioned it, Standard &amp; Poor's downgraded its outlook on Indonesia's BB+ rating from positive to stable in May. S&amp;P is the one of the three major ratings agencies that does not currently have an investment grade rating on Indonesia.

	The lower outlook to stable (instead of positive) implies that it will take at least 12 months before Indonesia can receive the investment grade status from S&amp;P, <a href="http://www.indonesia-investments.com/news/news-columns/s-p-downgrades-indonesias-bb-credit-rating-from-positive-to-stable/item708">Indonesia Investments</a>.

	There is danger on the credit rating front, not the least of which comes from the fact that credit ratings firms often follow each other. The Philippines is a perfect example of that, <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/04/3529992/moodys-bullish-on-the-philippines">though in a positive way</a>. If S&amp;P lowers its rating on Indonesia, the country could see its investment grade rating pulled by Fitch or Moody's.

	For now, talk of sovereign downgrade is just speculation. What is not speculation is that last week, Bank of Indonesia, the country's central bank, raised the secondary reserve requirement for lenders to 4 percent from 2.5 percent while dropper the loan-to-deposit ratio to 78 percent to 92 percent from 78 percent to 100 percent. The latter move can be seen as tighter policy.

	Adding to the persistent bout of bad news for EIDO and IDX is Indonesia's widening current account deficit, which rose to a record $9.8 billion last quarter, <a href="http://www.bloomberg.com/news/2013-08-19/indonesian-rupiah-stocks-plummet-on-current-account-gap.html">Bloomberg</a>. A widening account deficit, plunging currency, sliding stocks, inflation problems and a tenuous credit situation makes Indonesia <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/08/3806074/more-misery-ahead-for-india-etfs">sound a lot like India</a>.

	Bank of Indonesia's tighter monetary policy could crimp loan growth. That is significant at the ETF level because IDX and EIDO allocate 34 percent and 35.8 percent of their respective weights to the financial services sector.

	As for soaring Indonesian bond yields, that is a problem that, unfortunately, not contained to just two ETFs. At least five emerging markets bond ETFs that are among the largest listed in the U.S. tracking this particular asset class have weights to Indonesia that can be considered "somewhat significant." The iShares Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) has an almost 11.2 percent weight to the country while two competing funds have weights of over 10 percent to Indonesian bonds.

	The Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>) has a 6.5 percent weight to the rupiah.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

	Disclosure: Author owns none of the securities mentioned here.

The woes of the iShares MSCI Turkey ETF (NYSE: <a class="ticker" href="/stock/tur#NYSE">TUR</a>) are well-documented. TUR, the lone Turkey-specific ETF, was one of 2012's top-performing emerging markets ETFs. It was no slouch through the first five-plus months of this year, either, gaining 14 percent from the start of the year through mid-May as other emerging markets ETFs wilted.

	Then came the worst civil unrest since Prime Minister Recep Tayyip Erdogan took power a decade ago. Turkey, once hailed as the beacon of <a href="http://www.benzinga.com/markets/bonds/13/06/3643059/the-turkey-etf-got-really-ugly-really-fast#ixzz2Z862Nh9l">economic stability and allure</a> in the Arab world, showed investors it has much in common with other parts of the developing world. That is not a good thing when investors realize a country's bonds, equities and currency market can be undone by Arab Spring-type protests.

	Since May 13, investors have pulled <a href="http://www.indexuniverse.com/data/etf-fund-flows-tool.html">almost $64.4 million from TUR</a> after pumping $300 million into the ETF for the 12 months ending May 27. And since May 13, the ETF has plunged nearly 25 percent, putting the now $640.5 million fund firmly in bear market territory.

	In fact, TUR has actually performed worse than Turkey's benchmark Borsa Istanbul-100 Index. Since May 22, the index is off 22 percent, but the ETF has plunged 25 percent. One byproduct of that decline is Turkish stocks, previously <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/05/3557775/turkey-etf-hits-new-high-on-credit-rating-chatter">considered richly valued</a> as investors poured into the market due to favorable demographics and anticipation of an investment-grade credit rating, are now inexpensive.

	RELATED: <a href="http://www.benzinga.com/news/13/06/3667008/what-next-for-turkey">What Next for Turkey?</a>

	Last week, the Borsa Istanbul-100 traded yesterday at 9.2 times the next year's estimated earnings, near the lowest since July 2012, <a href="http://www.bloomberg.com/news/2013-07-11/turkey-stocks-cheapest-in-year-as-profit-growth-outpaces-peers.html">according to Bloomberg</a>. That represents a slight discount to the 9.9 times forward earnings the MSCI Emerging Markets Index trades at .

	TUR highlights the discounts now available with Turkish stocks. The iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), of which Turkey accounts for a scant percentage, has a P/E of over 18. TUR's P/E ratio is 12.44, indicating the fund trades at more favorable valuations than the comparable Brazil ETF or the iShares MSCI South Korea Capped ETF (NYSE: <a class="ticker" href="/stock/ewy#NYSE">EWY</a>). EWY has recently been praised <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/07/3743218/the-south-korea-etf-myth">for being home to scores of cheap stocks</a>.

	More Risks 
	The strong lira was one of the factors that helped boost TUR and its holdings in the past because Turkey, unlike some larger emerging markets, is not export dependent. It was a robust domestic economy and sturdy currency that increased the allure of Turkey to foreign investors, but in the wake of the protests, the lira has plunged, making the currency one of the worst-performers in the developing world.

	As a result, Turkey's central bank, one with a reputation for acting quickly, is now mulling rate hikes just two months after <a href="http://www.benzinga.com/markets/bonds/13/05/3598606/these-etfs-could-be-affected-by-future-rate-cuts">cutting rates to 4.5 percent</a> and saying it could go as low as 2.5 percent.

	The falling lira has weighed on bond ETFs with exposure to Turkish debt denominated in the local currency such as the iShares Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) and the Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>).

	Risks to Turkish stocks do not end with dismal-looking credit markets. Some investors have pointed to Turkey as one emerging market particularly vulnerable to <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/05/3620253/fed-tapering-could-hurt-this-etf-and-its-not-one-youd-expect">Federal Reserve tapering</a> of quantitative easing. Then there is Erdogan's plan to hold elections as soon as 2014, an event that could stir an already fractious political environment and further pressure Turkish bonds and equities.

	Those looking for positives about TUR can point to two factors. First, some investors see opportunity for the patient, such as those with 12-month or long time horizons. Second, when Turkish stocks were cheap in July 2012, TUR surged 27.8 percent from the start of that month through year-end.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Long emerging markets bond ETFs may be yesterday's trade (not actually yesterday), but traders know what that statement means. However, the woes and subsequent repudiation of this asset class are today's, last week's and last month's headlines.

	Stung by the specter of receding Federal Reserve stimulus, the emerging markets label on any asset class might as well read "Do Not Touch."

	That sentiment is particularly evident with ETFs that hold emerging markets debt. It does not matter if the debt is sovereign or corporate; investment-grade or junk; dollar-denominated or local currency. Due to a raft of protests, <a href="http://www.benzinga.com/markets/bonds/13/06/3682106/this-em-bond-etfs-luck-cant-get-any-worse-can-it">tumbling currencies and the looming loss of U.S. easing</a> investors are running away from developing world bond funds.

	While S&amp;P Capital IQ analyst Alec Young "isn't surprised that EM assets have succumbed to sharp selling pressure, as the magnitude of future stimulus has come into question amid an improving U.S. economic outlook that has 
	markets discounting an accelerated Fed tapering timeline," said the research firm in a new note, the analyst "believes, the open-ended nature of the Fed tapering overhang should continue to limit rallies and fuel continued EM underperformance over the coming months. After all, U.S. interest rates - while up sharply from mid-May - remain historically low, leaving plenty of room for additional rate increases to further undermine already fragile investor EM sentiment."

	As a result, S&amp;P Capital IQ has tepid to bearish views on some emerging markets bond ETFs. The Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>), which is down 10 percent in the past month, earned a Marketweight rating from S&amp;P.

	That rating is not terrible considering EMLC currency exposures read like a who's who of downtrodden currencies. The Brazilian real, Mexican peso, South African rand and Turkish lira combine for over 36 percent of EMLC's currency weight.

	"Many major emerging nations are now expected to post weaker growth in 2013 than last year. These include China, India, Indonesia, Mexico, Russia, Poland, Peru and Chile. In addition, many others like Brazil and Turkey, which are still expected to top 2012's paltry growth rates, have recently faced popular unrest, highlighting that risks are firmly to the downside," said S&amp;P Capital IQ in the note.

	The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) has been plagued by similarly concerning country exposures. As if Turkey and the Philippines combining for 26 percent of EMHY's weight is not bad enough, Venezuela garners a weight of 15.5 percent in the ETF and there is talk of another bolivar devaluation. EMHY is down 11.2 percent in the past month and S&amp;P rates that ETF Underweight.

	S&amp;P also has a lukewarm view on the dollar-denominated iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>). EMB, the largest emerging markets bond ETF by assets, garnered a Marketweight rating. EMB is down 10 percent in the past month and although the ETF is dollar-denominated, it's country exposures are no more attractive than the other funds highlighted in the S&amp;P note.

	Russia, Turkey, Brazil, Mexico, Indonesia and the Philippines combine for nearly 38 percent of EMB's weight.

	"Emerging Market Sovereign bond spreads over the 10-year U.S. Treasury have widened from 2.5% in January 2013 to above 3.7% in recent days. Given the EM underperformance Young expects for the coming months, S&amp;P Capital IQ thinks investors who have long come to expect capital appreciation potential for fixed income ETFs offering emerging market exposure should be more cautious," said S&amp;P.

	The other thing that is widening is credit default swaps used to insure $10,000 worth of sovereign debt for five years. Well, CDS on Chinese and Brazilian debt are widening. CDS on Chinese debt are at their highest levels in over a year while swaps on Brazilian debt are at the highest levels since 2011, <a href="http://www.bespokeinvest.com/">according to Bespoke Investment Group</a>.

	Emerging markets corporates offer advantages such as <a href="http://www.wisdomtree.com/blog/index.php/the-case-for-emerging-markets-corporates/">lower durations and higher yields</a> over their U.S. peers, but that has not stopped the iShares Emerging Markets Corporate Bond Fund (BATS: CEMB) from falling 10.2 percent in the past four weeks. S&amp;P Capital IQ has an Underweight rating on that ETF.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Specialty ETFs

S&P: Not Much to Like With EM Bond ETFs

At least for the moment, it is fair to say emerging markets bonds are "so 2012" and it really does not matter if one is talking about the dollar-denominated variety or local currency bonds. 

Amid plunging currencies and heightened fears the Federal Reserve is looking to end quantitative easing, investors have scampered out of emerging markets bond ETFs at almost break-neck speed in recent weeks.

Since the start of May, the iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>),the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE: <a class="ticker" href="/stock/pcy#NYSE">PCY</a>) and the Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>) have lost over $1 billion in assets combined, <a href="http://www.indexuniverse.com/data/etf-fund-flows-tool.html?task=showETFFlowsData">according to Index Universe data</a>.

On emerging markets bond ETF that has yet to be hit by the outflow virus is the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>). No, this is not a misprint, but EMHY has seen INFLOWS of almost $5.5 million since early May. 

EMHY started to rally last year and kept those good times going into the first quarter on expectations that Turkey and the Philippines would receive investment-grade credit ratings, thereby increasing the value of the junk debt that comprises the fund's lineup. Nearly two-thirds of EMHY's holdings are rated between BBB- and B- on the Standard &amp; Poor's ratings scale, <a href="http://us.ishares.com/product_info/fund/overview/EMHY.htm?fundSearch=true&amp;qt=EMHY">according to iShares data</a>.

Ratings agency have elevated both Turkey and the Philippines to investment-grade territory, but the market is focusing on more important issues at the moment, such as violent anti-government protests in Turkey and a rapidly falling Philippine peso. 

Still, <a href="http://www.benzinga.com/markets/bonds/13/05/3637835/investors-sticking-by-em-junk-bond-etfs-for-now">investors have stuck by the ETF</a> even as the headlines have grown more challenging. Turkey and the Philippines are not afterthoughts in this ETF. Rather, the two combine for over 26 percent of EMHY's country weight.

As if that is not bad enough for EMHY, the ETF was hit with more bad news Monday when S&amp;P lowered Venezuela's credit rating to B from B+. Venezuela is EMHY's second-largest country weight at 14.7 percent. 

To its credit, EMHY actually gained after that news crossed the wires, which is not all that surprising given the ETF's history of proving sturdy in <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/02/3318743/venezuela-devaluation-having-mixed-impact-on-etfs">the face of bad news out of Venezuela</a>. Investors wonder when EMHY might tumble as all this bad news mounts. Turkey, Venezuela and the Philippines represent over 40 percent of the ETF's weight. Common sense and simple math dictate that bad news cannot keep mounting in those countries without leading to, at

Then again the aforementioned scenarios are enough to make investors wonder when EMHY might tumble as all this bad news mounts. Turkey, Venezuela and the Philippines represent over 40 percent of the ETF's weight. Common sense and simple math dictate that bad news cannot keep mounting in those countries without leading to, at best, outflows for EMHY, and at worst, share price retrenchment. 

As one last noteworthy tidbit, it is worth acknowledging that the yield premium investors demand to hold Lebanon's $34 billion of dollar debt over U.S. Treasurys climbed 33 basis points in the past four weeks to 464 on June 11, <a href="http://www.dailystar.com.lb/Business/Lebanon/2013/Jun-14/220302-hezbollah-role-in-syria-drives-up-lebanon-risk.ashx#axzz2WUrUJCVj">here</a>.

PowerShares Emerging Markets Sovereign  Portfolio

This EM Bond ETF's Luck Can't Get Any Worse, Can It?

Shares of the once hot iShares MSCI Turkey Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/tur#NYSE">TUR</a>) are plunging Monday as political protests in the country have grown increasingly violent. 

This is the worst spate of civil unrest and opposition to his authority since Prime Minister Recep Tayyip Erdogan took power a decade ago.

Erdogan has delivered economic growth to Turkey and that growth fueled an almost 50 percent gain one-year gain for TUR through last Friday. Turkey's improving economic fundamentals helped TUR hit a series of new highs <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/05/3557775/turkey-etf-hits-new-high-on-credit-rating-chatter">as Turkey gained investment-grade credit ratings</a>. 

Investors took note, pumping over $300 million in new assets into TUR for the 12-month period ending May 27, but a growing number of Turks say the regime there has also adopted increasingly authoritarian tactics and has attempted to more aggressively Islamize Turkey's secular state, <a href="http://online.wsj.com/article/SB10001424127887324063304578522931905652510.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsThird">according to the Wall Street Journal</a>.

The specter of an Arab Spring type of revolution in Turkey has hastened TUR's woes after Turkish equities were recently highlighted as pricey and <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/05/3620253/fed-tapering-could-hurt-this-etf-and-its-not-one-youd-expect">vulnerable to chatter</a> about the end of quantitative easing. This how bad things for TUR.

Currently sitting on an intraday loss of 8.5 percent, TUR is on track for its worst one-day performance in its slightly more than five-year history.

Last week, $7 million was pulled from the ETF, according to <a href="http://www.indexuniverse.com/data/etf-fund-flows-tool.html?task=showETFFlowsData">Index Universe data</a>. It is not unreasonable to expect that number will grow.

Assuming a loss of about eight percent Monday, TUR will have fallen 15 percent in the past week. The last time TUR lost 15 percent or more in a week was in the fourth quarter of 2008.

In late 2009, Turkey was home to five days of Kurdish protests, but TUR traded higher in the face of those protests.

Monday is the first trading day of June and in that one day, TUR has accumulated enough of a loss to be more than a third of the way to its worst monthly performance since September 2008 when the ETF lost more than 23 percent.

Not Just Equities
The Turkish protests are hurting the country's bonds as well as Turkish bond yields hit their highest level since 2006. The yield on benchmark two-year lira bonds rose 44 basis points to 6.51 percent, the biggest jump in percentage terms since June 2006, <a href="http://www.sfgate.com/business/bloomberg/article/Turkish-Bonds-Lose-Most-Since-2006-as-Protests-4571447.php#ixzz2VBIlAWE0">Bloomberg reported</a>.

That explains why the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>), which allocates more than 18.6 percent of its weight to Turkey, is off 1.6 percent today on volume that is quadruple the daily average. 

With the Turkish lira hitting its lowest levels against the U.S. dollar in nearly a year-and-a-half, bond denominated in the Turkish currency are not faring much better. For example, the Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>), which features a mere 7.4 percent allocation to Turkish debt, dropped 0.72 percent today on volume that was nearly triple the daily average. 

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Technicals

The Turkey ETF Got Really Ugly Really Fast

All the chatter about rising interest rates has not done much to help high-yield bonds this month. Junk bonds, favored by investors not only for high yields, but for lower durations that make the bonds less sensitive to interest rate risk, are headed for a monthly decline.

	The 21 primary dealers that work with the Federal Reserve increased their positions in junk debt by $2.7 billion to $8.5 billion for the three weeks ending May 22, <a href="http://www.bloomberg.com/news/2013-05-31/junk-bonds-losing-0-3-percent-in-may-to-snap-11-months-of-gains.html">Bloomberg reported</a>. That same Bloomberg piece astutely notes that issuance is soaring, as in companies issued $44.1 billion in high-yield debt for the three weeks ending May 22.

	Broadly speaking, that has not been good for the asset class as U.S. junk bonds are headed for their first monthly loss in a year. As for ETFs, the two largest junk bond funds, the iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>), are likely to finish down about one percent this month.

	High-yield debt courtesy of emerging markets issuers has been noticeably worse in May. The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) and the Market Vectors Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/hyem#NYSE">HYEM</a>) are both in position to have May losses of more than 2.5 percent.

	Investors are not dumping emerging markets high-yield debt, at least not as measured by EMHY and HYEM. At least not yet. HYG and JNK are by far the two largest junk bond ETFs by assets and as such, control the bulk of the attention paid to ETFs tracking this asset class. In other words, investors have probably heard that money has been flowing out of these funds. JNK has seen second-quarter outflows of over $1.2 billion while HYG lost $324.3 million as of May 30.

	EMHY and HYEM have been pulling in new assets over the same time. EMHY, the iShares offering, has attracted almost $11 million in new assets since April. HYEM has pulled in almost $199 million of its $243.6 million in assets under management since the start of the second quarter, <a href="http://www.indexuniverse.com/data/etf-fund-flows-tool.html?task=showETFFlowsData">according to Index Universe data</a>.

	Not Much Attention 
	Neither EMHY nor HYEM are particularly old ETFs. Combine that with the fact that the concept of emerging markets high-yield is a new one to many U.S. investors, particularly on the retail side, it is not surprising that these two ETFs do not garner a lot of headlines. Both have been impressive asset gathers in a short amount of time

	EMHY debuted in April 2012 and now has $256.1 million in AUM. HYEM is a month younger and has almost $244 million assets.

	Those superlatives have not insulated the ETFs from being beaten up along with their more popular counterparts that track emerging markets sovereign debt. As fears of rising interest rates and the end of quantitative easing have spiked, emerging markets bond ETFs, both the dollar-denominated and local currency funds, have been pounded.

	For example, the Market Vectors EM Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>) is off five percent this month while the dollar-denominated iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>) is down 4.5 percent.

	Advantages 
	Emerging markets junk bond funds do hold some advantages of their U.S.-focused peers and that may be what is stemming outflows. In the case of EMHY, the ETF offers the potential for capital appreciation through its 28 percent combined weight to Turkey and the Philippines.

	Those countries have been on the receiving end of <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/05/3557775/turkey-etf-hits-new-high-on-credit-rating-chatter">multiple credit ratings upgrades this year</a> and that could prove important to EMHY going forward because the fund focuses on high-yield sovereigns, not corporates.

	HYEM, the Market Vectors fund, is more comparable to HYG or JNK due to its focus on corporate issues and quasi-sovereigns. Statistics indicate HYEM compares favorably with an ETF like JNK. JNK has a 30-day SEC yield of 4.62 percent, an average yield to worst of 5.4 percent and a modified adjusted duration of 4.28 years. For HYEM, those numbers are 5.78 percent, 6.57 percent and 4.4 years.

	There also is not a significant trade-off in credit quality. Roughly 83 percent of JNK's holdings are rated BB or B, <a href="https://www.spdrs.com/product/fund.seam?ticker=JNK">according to State Street data</a>. The same is true of HYEM.

	It is also worth noting the BofA Merrill Lynch High Yield US Emerging Markets Liquid Corporate Plus Index, the index HYEM uses for its sampling strategy, has a higher yield than the equivalent U.S. junk bond and emerging markets sovereigns indexes, <a href="http://vaneck.com/funds/HYEM.aspx">according to Market Vectors</a>.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

HYEM

Investors Sticking By EM Junk Bond ETFs...For Now

Shares of the iShares MSCI Turkey Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/tur#NYSE">TUR</a>) are trading modestly higher Friday and earlier touched a new 52-week high at $76.04 a day after the Borsa Istanbul National 100 surged to its highest levels in at least 25 years.

	The catalyst behind TUR's good fortune, the ETF has jumped more than seven percent in the past month, is <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/05/3553769/philippines-etf-hits-new-high-as-s-p-joins-investment-gr">one investors have already favorably impact</a> the iShares MSCI Philippines Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/ephe#NYSE">EPHE</a>) this week: Higher credit ratings.

	In the case of Turkey, it is talk of a higher sovereign debt rating that has been lifting TUR, the lone ETF devoted exclusively to the country. Turkey, which has been engaged in a multi-decade conflict with Kurdish militants in the Southeast part of the country, is working to end the conflict. The government there is in negotiations with Abdullah Ocalan, the jailed leader of the Kurdistan Workers' Party or PKK, in a bid to end the bloodshed, <a href="http://www.bloomberg.com/news/2013-05-02/turkey-index-set-for-record-on-bets-peace-process-to-aid-ratings.html">Bloomberg reported</a>.

	Last month, Moody's Investors Service said Turkey's ongoing efforts to bring an end to the conflict could be a positive credit step. In November, Fitch Ratings upgraded Turkey's long-term foreign currency Issuer Default Rating (IDR) to BBB- from BB+ and the Long-term local currency IDR to BBB from BB, giving Turkey <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/11/3062976/turkey-etf-down-slightly-after-fitch-investment-grade-ca#ixzz2SFTB9BhO">its first investment grade ratings in nearly two decades</a>.

	Moody's and Standard &amp; Poor's both currently rate Turkey one level below investment grade. Like the Philippines, Turkey has been aggressive in pursuit of investment-grade ratings. In May 2012, S&amp;P pared its outlook on Turkey's BB-rated sovereign debt to stable from positive, a move that drew Turkish policymakers' ire.

	Disagreements between Turkey and S&amp;P prompted the ratings agency to announce in January that it will no long rate individual Turkish bond issues and only maintain <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/01/3245901/flap-with-s-p-doesnt-derail-turkey-etf">a sovereign debt rating on the country</a>.

	At BB, S&amp;P has the same rating on Turkey that it has on Costa Rica, Guatemala and financially-challenged Hungary, to name a few.

	Speculation of a possible credit rating upgrade has lifted shares of Turkish banks, creating a palpable trickle down effect for TUR. The ETF allocates nearly 51.9 percent of its weight to financial services stocks, roughly quadruple its next largest sector weight, industrials.

	Others are taking note of Turkey's investment-grade potential.

	"Turkey's short-run risks were very low, this can play a positive role in raising its rating" said Orhan Okmen, Eurasia Administrative Council Director of Japan Credit Rating Agency, <a href="http://www.worldbulletin.net/?aType=haber&amp;ArticleID=108053">according to the World News Bulletin</a>.

	Beyond TUR, investors looking to profit from a Turkish credit rating upgrade via the credit market should consider the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>). With an average effective duration of 6.12 years, EMHY has an almost 17.7 percent weight to Turkey, making the nation that ETF's largest country weight. The WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>), the second-largest actively managed ETF, has a seven percent weight to Turkey. Turkey's is ELD's fifth-largest country weight.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Analyst Color

Upgrades

Rumors

ISHARES MSCI PHILIPPINES INVESTABLE MARKET INDEX FUND

EPHE

Turkey ETF Hits New High on Credit Rating Chatter

Shares of the iShares MSCI Philippines Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/ephe#NYSE">EPHE</a>) are soaring 2.2 percent Thursday, touched a new all-time high at $42.47 and all that is happening on volume that looks poised to easily eclipse the daily average.

The catalyst: Standard &amp; Poor's raised the Philippines' credit rating from BB+ to BBB-. Now the Southeast Asian nation has garnered two investment-grade ratings from major ratings agencies in just five weeks. 

In late March, EPHE got a lift after <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/03/3451569/philippines-etf-soars-on-first-investment-grade-rating">Fitch Ratings upgraded the Philippines'</a> long-term, foreign currency-denominated debt to BBB- from BB and the long-term local currency-denominated debt to BBB from BBB with stable outlooks on both ratings.

Fitch cited the Philippines' strong sovereign external balance and persistent current account surplus. S&amp;P likes the improving macroeconomic outlook for the Philippines.

"The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government's declining reliance on foreign currency debt," <a href="http://business.inquirer.net/119879/peso-rises-on-news-of-phs-credit-rating-upgrade-from-standard-poors">said S&amp;P</a>.

Just a few days ago, S&amp;P boosted its 2013 GDP growth outlook for the Philippines to 6.5 percent from 5.9 percent. In April, Moody's Analytics, a unit of Moody's Investors Service, said it expects the Philippine economy to grow <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/04/3529992/moodys-bullish-on-the-philippines">6.5 percent to seven percent this year</a>.

Last October, Moody's raised its rating on Philippine debt to Ba1, one level below investment grade territory.

Helped by the Philippines' status as the world's largest call-center destination and the fact that Filipinos, broadly speaking, are good English speakers, the country has been able to attract some higher-wage, high-skill jobs that are not all export-related. That has helped facilitate robust domestic demand while damping the country's exposure to export sensitivity.

While there has been chatter among some market participants that Japan's weak yen policy could lead to a lead to bubble in the equity markets of some top-performing Asian emerging markets such as the Philippines, EPHE's correlations to <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/04/3516880/emerging-asia-japan-etfs-and-the-correlation-myth">the two largest Japan ETFs</a> are scant and S&amp;P recently said the plunging yen could actually help the Philippines.

In another sign investors are warming to the Philippine investment thesis, EPHE had $205 in AUM in mid-December, but that number is now flirting with $468 million, <a href="http://us.ishares.com/product_info/fund/overview/EPHE.htm?fundSearch=true&amp;qt=EPHE">according to iShares data</a>.

Among bond ETFs with decent exposure to the Philippines, the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) is trading modestly higher today. EMHY's allocates 10.7 percent of its weight the Philippines, making the country's third-largest country weight behind Turkey and Venezuela. The $1.99 billion actively managed WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>) is also trading slightly higher Thursday. That ETF has a 3.7 percent weight to the Philippines.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Philippines ETF Hits New High as S&P Joins Investment-Grade Party

Here is the ETF Professor's ETF Watch List for Monday, April 15, 2013.

Keep an eye on the iShares MSCI Japan Index Fund (NYSE: <a class="ticker" href="/stock/ewj#NYSE">EWJ</a>).

The Direxion Daily Financial Bull 3X Shares (NYSE: <a class="ticker" href="/stock/fas#NYSE">FAS</a>) is worth a look.

The ProShares UltraShort Silver (NYSE: <a class="ticker" href="/stock/zsl#NYSE">ZSL</a>) should be in play.

Emerging markets plays of the day: iShares MSCI South Korea ETF (NYSE: <a class="ticker" href="/stock/ewy#NYSE">EWY</a>), Market Vectors Indonesia ETF (NYSE: <a class="ticker" href="/stock/idx#NYSE">IDX</a>) and the iShares S&amp;P Latin America 40 Index Fund (NYSE: <a class="ticker" href="/stock/ilf#NYSE">ILF</a>).

Forex play of the day: ProShares UltraShort Euro (NYSE: <a class="ticker" href="/stock/euo#NYSE">EUO</a>).

Bond play of the day: iShares Emerging Markets High Yield Bond Index Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>).

Sector ETFs

Broad U.S. Equity ETFs

New ETFs

Pre-Market Outlook

iShares Trust S&P Latin America 40 Index Fund

ETFs to Watch April 15, 2013 (EUO, FAS, ZSL)

Just about five weeks removed from the death of former Venezuelan President Hugo Chavez, the South American country holds its first election on Sunday since Chavez's passing.

	While the South American nation is a member of the Organization of Petroleum Exporting Countries and home to perhaps the largest oil reserves in the world, those oil riches have not translated to a thriving economy.

	Still, a heavily impoverished nation, Venezuela is not classified as an emerging market. In fact, index provider MSCI <a href="http://www.msci.com/products/indices/market_classification.html">stripped the country of that status in 2006</a>, demoting Venezuela to "standalone," a status that appears more ominous than the frontier markets designation.

	As such, accessing Venezuelan equities via U.S.-listed ETFs is impossible. Accessing Venezuelan bonds, however, is not. Adventurous investors have several options <a href="http://www.benzinga.com/markets/bonds/13/03/3382166/bond-etfs-resisting-chavez-rumors-yet-again">for getting exposure to Venezuelan bonds with ETFs</a> and those funds are basically steady ahead of Sunday's election.

	The Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>), which holds a 7.57 percent weight to Venezuela, is trading modestly lower today. In the case of BONO it is not surprising that Venezuela does not really move this ETF. The fund's real utility is as <a href="http://www.benzinga.com/markets/bonds/13/03/3400543/mexico-etf-rises-after-surprise-rate-cut">a strong play on Mexican bonds</a> as that country and Brazil combine for over 63 percent of the ETF's weight.

	BONO has a 30-day SEC yield of 4.52 percent and a yield to worst of 5.01 percent. The fund's average effective duration is 6.32 years.

	The Market Vectors Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/hyem#NYSE">HYEM</a>) is also trading lower, though only modestly so. That ETF features a 7.25 percent weight to Venezuela, making it that ETF's fifth-largest country weight behind China, Russia, Mexico and Indonesia. Interestingly, HYEM's largest and fifth-largest holdings are issued by Petroleos de Venezuela, that country's state-run oil producer, but even that fact has not been enough to move HYEM ahead of Sunday's election.

	More impressive about HYEM is its stunning asset growth that hardly anyone has noticed. On December 20, <a href="http://www.benzinga.com/markets/bonds/12/12/3192140/these-etfs-have-seen-jaw-dropping-aum-growth-in-december">this ETF had less than $27 million in assets</a>. As of April 11, that number surged to $237.1 million. HYEM has an average effective duration of 4.12 years and an average yield to worst of 6.08 percent.

	The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) is the one ETF that could potentially be vulnerable following Venezuela's election results because this fund features an almost 17 percent weight to the country.

	EMHY's potential vulnerability comes by virtue of the fact that Chavez's heir apparent, Nicolas Maduro, is likely to win the election by double-digits. Perhaps the bond market has started to price that result in. Even if that is the case, it deals a blow to bond traders and foreign investors that have been hoping a change in regime would open Venezuela to more foreign investment and economic advancement.

	Turkey is EMHY's largest country weight while the Philippines trails Venezuela. EMHY is down half a percent today, but has gained 10.5 percent over the past year. The fund has an effective duration of 5.97 years and a 30-day SEC yield of 5.36 percent.

	For more on bond ETFs, click <a href="http://www.benzinga.com/markets/bonds/13/04/3493707/nifty-junk-bond-etfs-your-broker-forgot-to-mention">here</a>.

BONO

Bond ETFs Mixed Ahead of Venezuela Election

There has been plenty of chatter regarding a great rotation out of bonds into stocks, but ETF inflow data indicate otherwise. In the month of March U.S. stock funds hauled in $11.2 billion in fresh cash, but bond ETFs were sturdy with $4.6 billion in inflows, <a href="http://seekingalpha.com/article/1336301-etfs-rake-in-53-billion-in-q1?source=google_news">according to Morningstar data</a>.

	Morningstar points out the leaders among bond ETFs in terms of first-quarter inflows were the Vanguard Short-Term Bond ETF (NYSE: <a class="ticker" href="/stock/bsv#NYSE">BSV</a>) and the PowerShares Senior Loan Portfolio (NYSE: <a class="ticker" href="/stock/bkln#NYSE">BKLN</a>) at $2.2 billion and $1.5 billion, respectively. Year-to-date, BKLN is the top asset-gather in the entire PowerShares lineup with inflows of $1.73 billion, <a href="http://www.invescopowershares.com/flows/">according to issuer data</a>.

	BKLN and BSV have been steady in terms of pure performance as well, but there are some unheralded options within the high-yield bond ETF universe that investors may want to consider. Consider the following funds.

	AdvisorShares Peritus High Yield ETF (NYSE: <a class="ticker" href="/stock/hyld#NYSE">HYLD</a>) 
	If one follow enough mainstream financial media reporting on high-yield bond ETFs, one is apt to come away with two thoughts. First, <a href="http://www.benzinga.com/markets/bonds/12/12/3144876/following-redemptions-junk-bond-etfs-at-multi-week-highs">the issue of outflows from these funds</a> has been greatly overstated. Second, there are two only high-yield bond ETFs worth looking at: The iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR Barclays Capital High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>).

	Nothing could be further from the truth as HYG and JNK have plenty of credible challengers, including the Peritus High Yield ETF, an actively managed product with over $222.5 million in assets under management.

	Actually, it is HYG and JNK that have a hard time holding a candle to HYLD, at least in terms of performance this year. HYG and JNK, the two largest junk bond ETFs by assets, are up an average of 2.9 percent year-to-date. HYLD is higher by 5.2 percent and has been 150 basis points less volatile than its large rivals. The rub is investors will pay up for active management with a <a href="http://advisorshares.com/fund/hyld">net expense ratio of 1.35 percent</a>.

	PIMCO 0-5 Year High Yield Corporate Bond Index Fund (NYSE: <a class="ticker" href="/stock/hys#NYSE">HYS</a>) 
	Just a couple of months shy of its second birthday, the PIMCO 0-5 Year High Yield Corporate Bond Index Fund does not lead a completely anonymous existence. Nor does it receive the fanfare that HYG and JNK do. Still, there is no denying HYS is massive ETF with nearly 1.9 billion in AUM.

	HYS competes directly with the SPDR Barclays Short Term High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/sjnk#NYSE">SJNK</a>), another prime example of a junk bond ETF <a href="http://www.benzinga.com/markets/bonds/13/01/3229283/junk-bond-etfs-keep-on-trucking">the mainstream press has all but ignored</a>. That is OK because SJNK had almost $519 million in AUM in early December. It now has over $1.1 billion.

	So there is roughly $3 billion in two short duration junk bond ETFs, indicating investors like the idea of high yields with diminished interest rate risk. HYS delivers with an estimated yield to maturity of 4.51 percent, a distribution yield of 4.87 percent and an effective duration of 1.87 years, <a href="http://www.pimcoetfs.com/Funds/Pages/HYS.aspx?WT.svl=nav">according to PIMCO data</a>. That duration is slightly lower than the modified adjusted duration of 2.06 years on SJNK.

	iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) 
	The iShares Emerging Markets High Yield Bond Fund, which has amassed nearly $258 million in AUM in just over a year of trading, is one ETF international bond investors might want to keep an eye on in the coming days. Actually, keep an eye on EMHY on Friday and Monday because the ETF <a href="http://www.benzinga.com/markets/bonds/13/03/3382166/bond-etfs-resisting-chavez-rumors-yet-again">has one of the largest exposures to Venezuela</a>.

	Venezuela holds a general election Sunday, the first since the death of former President Hugo Chavez. Chavez's heir, Nicolas Maduro is expected to win and that is an outcome the bond market may not like. And one that could make EMHY somewhat vulnerable with an almost 17 percent weight to Venezuela. Turkey is EMHY's largest country weight and the Philippines is third after Venezuela.

	EMHY has a distribution yield of 5.43 percent and an effective duration of 5.97 years, <a href="http://us.ishares.com/product_info/fund/overview/EMHY.htm">according to iShares data</a>.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

BKLN

HYLD

SJNK

Nifty Junk Bond ETFs Your Broker Forgot to Mention

On Tuesday, Venezuelan Vice President Nicolas Maduro confirmed that President Hugo Chavez passed away, ending a two-year bout with cancer. Chavez, 58, controlled Venezuela, South America's largest oil producer, for 14 years. Frequently an antagonist of the U.S., Chavez even blamed the U.S. for <a href="http://www.cnbc.com/id/100373867">orchestrating a 2002 coup aimed at toppling his regime</a>.

With Chavez's passing, investors and traders with exposure to Latin America are perhaps hoping a new regime, one with more free market principles, comes to power in Venezuela. As has been previously noted, <a href="http://www.benzinga.com/markets/bonds/13/03/3382166/bond-etfs-resisting-chavez-rumors-yet-again">only a few bond ETFs offer U.S. investors any form of Venezuela exposure</a>.

With no equity-based Venezuela ETF currently on the market, the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) acts as a bond alternative to tapping into Venezuela. The fund features an allocation of almost 17.5 percent to the South American nation, <a href="http://us.ishares.com/product_info/fund/overview/EMHY.htm?fundSearch=true&amp;qt=EMHY">according to iShares data</a>.

On the equity-based front, investors have a couple of options, stretches as they may be. Start with the iShares S&amp;P Global Energy Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixc#NYSE">IXC</a>).

Not only is Venezuelan Latin America's largest oil producer, it is a member of the Organization of Petroleum Exporting Countries. And not only is Venezuela an OPEC member, but it is home to the <a href="http://www.marketwatch.com/story/venezuela-oil-reserves-topped-saudis-in-2010opec-2011-07-18">largest oil reserves in the world</a>. Yes, even larger than Saudi Arabia's. Some estimates pin the number at 256 billion barrels. Add to that, the country is home to the largest natural gas reserves in the Western hemisphere.

Despite its abundance of oil riches, Venezuela long ago nationalized its oil industry and foreign firms operating there during Chavez's reign faced myriad challenges. For example, in 2011 the country's energy ministry threatened <a href="http://www.reuters.com/article/2011/01/27/venezuela-oil-idUSN2727522220110127">some Western oil companies</a> with loss of their exploration rights if they did not boost production.

Back to the iShares S&amp;P Global Energy Sector Index Fund. This ETF and its rival, the smaller SPDR S&amp;P International Energy Sector ETF (NYSE: <a class="ticker" href="/stock/ipw#NYSE">IPW</a>) are ideally positioned to take benefit if Venezuela embraces a new form of government and opts to act as a partner with rather than a dictator to Western oil companies.

IXC, which has just over $1 billion in assets under management, devotes about 28 percent of its weight to Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), Chevron (NYSE: <a class="ticker" href="/stock/cvx#NYSE">CVX</a>) and BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>). In addition to the Boscan Field, Chevron has operations in the Plataforma Deltana region and in the Gulf of Venezuela. 

Exxon's Cerro Negro in Venezuela was seized, but with the company's need to bolster oil reserves and production, it is not a stretch to see the largest U.S. oil company warming to Venezuela once again if the circumstances are favorable. 

BP does not have a major Venezuelan presence, but after selling scores of assets in the wake of the 2010 Gulf of Mexico spill, Europe's second-largest oil company is looking for avenues to increase production. 

Other IXC constituents that previously had or currently maintain a Venezuelan footprint include Total (NYSE: <a class="ticker" href="/stock/tot#NYSE">TOT</a>), ConocoPhillips (NYSE: <a class="ticker" href="/stock/cop#NYSE">COP</a>), Eni (NYSE: <a class="ticker" href="/stock/e#NYSE">E</a>) and Petrobras (NYSE: <a class="ticker" href="/stock/pbr#NYSE">PBR</a>). Those four stocks combine for another 9.4 percent of IXC's weight.

As for IPW, that ETF features no exposure to U.S. companies, but BP, Total and Eni combine for almost a quarter of the ETF's weight, giving the fund some leverage to the Venezuela oil story. Additionally, Royal Dutch Shell (NYSE: RDS-A) has done business in Venezuela for a century. Two different Shell securities combine for over 16 percent of IPW's weight.

Bottom line: There are no guarantees these stocks and ETFs will react immediately to the Chavez news, but the two funds are worth monitoring, particularly in the event of legitimate Venezuelan regime change.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Futures

Commodities

After-Hours Center

General

iShares Trust S&P Global Energy Sector Index Fund

2 Energy ETFs Could Benefit From Chavez Passing

Rumors of Venezuelan President Hugo Chavez's death are back. On Thursday, Vice President Nicolás Maduro, Chavez's likely successor, took to Venezuelan television to ward off speculation of the president's passing. 

That came a day after CNN Chile, citing a Panamanian diplomat, <a href="http://www.theatlanticwire.com/global/2013/03/hugo-chavez-not-dead-hes-close/62654/">reported that Chavez had passed away</a>.

Maduro did say Chavez "is battling there for his health, for his life, and we're accompanying him," according to The Atlantic. While two months of ongoing health woes for Chavez may seem ominous and increase speculation that the long-serving Venezuelan leader is not alive, the headlines are not having much of an impact on the ETFs that hold debt issued by the South American nation.

That is a repeat of performances previously seen on <a href="http://www.benzinga.com/markets/bonds/12/12/3164041/etfs-with-venezuela-exposure-mixed-on-chavez-cancer-news">news of Chavez's frail condition</a>. In December when Chavez went to Cuba to receive cancer treatment, bond ETFs with Venezuela exposure did not move much on the news and that is the case again today.

For example, the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) is down fractionally on volume that appears poised to finish below the daily average. The 11-month old iShares Emerging Markets High Yield Bond Fund features a 17.45 percent weight to Venezuela. That makes Venezuela the largest country weight in the fund and EMHY the ETF with by far the largest exposure to the country.

While it may not be interesting that the Chavez speculation is not doing much to impact EMHY, there are a couple of compelling factoids pertaining to this ETF. First, the ETF's exposure to Venezuela has increased by about 200 basis points since late December. Second, despite all the chatter about the high-yield bond market bubble on the cusp of bursting, EMHY's assets under management tally has surged 33 percent in the past three months.

EMHY has an effective duration of 5.97 years and an average yield to maturity of 6.04 percent, <a href="http://us.ishares.com/product_info/fund/overview/EMHY.htm?fundSearch=true&amp;qt=EMHY">according to iShares data</a>.

The Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>), which features a 7.75 percent allocation to Venezuela, is up by half a percent today. Like EMHY, BONO's volume is positioned to be well below the daily average. 

BONO's resistance to Venezuela news is not unusual. No Venezuelan issues are featured among the ETF's top-10 holdings and BONO has earned a reputation as being an avenue for <a href="http://www.benzinga.com/markets/bonds/13/02/3310348/gross-peso-tweet-not-doing-much-for-em-bond-etfs">tapping less risky Latin American debt</a>, such as Mexican bonds. With an average effective duration of 6.35 years, BONO is another foreign bond ETF that has grown rapidly. The fund spent much of last year with less than $10 million in assets, but now has almost $26 million.

The Market Vectors Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/hyem#NYSE">HYEM</a>), the youngest of the three ETFs highlighted here, is off just a penny today. HYEM had a weight of 7.75 percent to Venezuela at the end of January, though that is down about 100 basis points from December.

Two issues from Venezuela's state-run oil company, Petroleos de Venezuela, are HYEM's largest and tenth-largest holdings, respectively, but the ETF's performance today proves Chavez and his country are not the tails that wag HYEM's dog. 

Beyond Venezuela or any other geopolitical headwinds, HYEM is another ETF that contradicts the notion that investors no long favor high-yield debt. HYEM had $21.2 million in AUM in late December, but now has over $43 million, <a href="http://vaneck.com/funds/HYEM.aspx">according to Market Vectors data</a>.

For more on Latin American bonds, click <a href="http://www.benzinga.com/markets/bonds/13/02/3310348/gross-peso-tweet-not-doing-much-for-em-bond-etfs">here</a>.

Politics

Bond ETFs Resisting Chavez Rumors Yet Again

After announcing a 3.3 percent increase in January inflation earlier today, the Venezuelan government has announced it will devalue the bolivar to 6.3 per U.S. dollar from 4.3. 

Venezuela, a member of the Organization of Petroleum Exporting Countries (OPEC), is grappling with rampant inflation, which may have prompted the currency devaluation.

Venezuela's inflation rate was 20.1 percent last year, its best rate in four years, but still one of the highest in Latin America, <a href="http://www.reuters.com/article/2013/02/08/venezuela-inflation-idUSL1N0B66AS20130208">Reuters reported</a>. Despite the new exchange rate, there is speculation that U.S. dollars are commanding 16 to 17 bolivars on the black market.

News of the bolivar devaluation is having an curious impact on various exchange traded funds. While there is no Venezuela-specific ETF on the market today, there are several that offer <a href="http://www.benzinga.com/markets/bonds/12/12/3164041/etfs-with-venezuela-exposure-mixed-on-chavez-cancer-news">exposure to Venezuelan bonds</a>.

The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) is actually trading slightly higher on below average volume, a situation some traders may see as odd given EMHY's almost 18 percent allocation to Venezuela. 

The Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>) is off half a percent and trading at its lows of the day, though it should be noted the ETF was already trading to the downside before the Venezuela news hit the wires. Venezuela has a 7.75 percent weight in BONO, putting it well behind Brazil, Mexico and Colombia.

One ETF that moved lower immediately following the bolivar news might come as a surprise to some. The Consumer Staples Select SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>) was dragged lower by declines in consumer products giants Procter &amp; Gamble (NYSE: <a class="ticker" href="/stock/pg#NYSE">PG</a>) and Colgate Palmolive (NYSE: <a class="ticker" href="/stock/cl#NYSE">CL</a>). 

Last August, P&amp;G warned that <a href="http://www.businessweek.com/news/2012-08-03/p-and-g-bracing-for-large-venezuela-devaluation-after-election">it was bracing for a bolivar devaluation</a>. P&amp;G and Colgate took earnings hits in 2010 when Venezuela last devalued its currency. Venezuela accounted for about one percent of P&amp;G's 2011 revenue.

P&amp;G and Colgate have had their share of trials and tribulations in Venezuela. Several years ago, Venezuela's consumer protection office announced it was investigating the two companies, alleging they failed to comply with government price controls on select household items.

The two stocks are top-10 holdings in XLP, combining for 17.7 percent of the fund's weight.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Venezuela Devaluation Having Mixed Impact on ETFs

The iShares MSCI Turkey Investable Index Fund (NYSE: <a class="ticker" href="/stock/tur#NYSE">TUR</a>) posted a modest gain on Tuesday, but that was enough to have the high-flying ETF flirting with a new 52-week. One of 2012's top-performing emerging markets ETFs, the iShares MSCI Turkey Investable Market Index Fund has kept the good times going in 2013 with a gain of almost 2013.

That run seems and Tuesday's gain seem to indicate Turkey's flap with ratings agency Standard &amp; Poor's does not mean much to Turkish equities or investors. On Monday, <a href="http://www.theglobeandmail.com/report-on-business/international-business/european-business/turkey-and-sp-fail-to-reach-deal-after-spat-over-junk-bond-rating/article7341399/">Reuters reported</a> that S&amp;P will no longer rate individual Turkish bond issues as of February 14. From that date onward, S&amp;P will only issue a rating on the overall Turkish sovereign creditworthiness. 

The flap between Turkey and S&amp;P stems from the ratings agency decision in May 2012 to lower its outlook on Turkey's BB-rated sovereign debt to stable from positive. Turkey viewed the move as damaging to its goal of landing an investment-grade rating, which would lower the country's borrowing costs. 

At BB, S&amp;P has the same rating on Turkey that it has on Costa Rica, Guatemala and financially-challenged Hungary, to name a few. As is the case with some other <a href="http://www.benzinga.com/markets/bonds/13/01/3240809/hsbc-hops-on-philippines-investment-grade-bandwagon">noteworthy developing nations</a>, Turkey is pressing for an investment-grade rating. And is the case with some of those other countries, such as the Philippines, Turkey can make a viable argument for why its sovereign debt is deserving of a rating above junk status.

The country is <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/3007563/etf-is-soaring-but-turkey-is-on-sale">home to favorable demographics and a shrinking deficit</a>, among other positive catalysts. Last year, JPMorgan raised its outlook on Turkey to Overweight from Neutral. 

Speaking of upgrades, Turkey recently investment-graded status, just not from S&amp;P. In November, <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/11/3062976/turkey-etf-down-slightly-after-fitch-investment-grade-ca">Fitch Ratings</a> upgraded Turkey's long-term foreign currency Issuer Default Rating (IDR) to BBB- from BB+ and the Long-term local currency IDR to BBB from BB. The outlooks on those ratings are stable.

Fitch also raised Turkey's short-term foreign currency IDR to F3 from B and the Country Ceiling to BBB from BB. In the wake of the issues with S&amp;P, Turkish policymakers were quick to point out the country still has ratings agreements with Fitch and Moody's Investors Service. Moody's upgraded Turkey's sovereign credit rating to Ba1 in June 2012.

Regarding bond ETFs that offer exposure to Turkish sovereigns, the S&amp;P news was equally as inconsequential as it was to TUR. Turkey is the largest country weight in the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE: <a class="ticker" href="/stock/pcy#NYSE">PCY</a>), but that ETF only suffered a minor loss on Tuesday. Turkey is the third-largest county weight in PCY's chief rival, the iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>). EMB closed slighty higher on Tuesday. Both ETFs offer dollar-denominated exposure to emerging markets sovereign debt.

The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) and the Market Vectors Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>) feature allocations of 16.5 percent and 8.3 percent, respectively, to Turkey. Both traded just slightly lower on Tuesday.

In perhaps another sign that S&amp;P's view on Turkish is not a deal-breaker for investors, this factoid is worth remembering: TUR had $627.4 million in assets under management as of November 6, 2012. At the start of trading on January 14, that number had surged to $874.4 million.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Termination

Flap With S&P Doesn't Derail Turkey ETF

Here is the ETF Professor's ETF Watch List for Tuesday January 15, 2013.

Keep an eye on the iShares Germany Index Fund (NYSE: <a class="ticker" href="/stock/ewg#NYSE">EWG</a>).

The Vanguard Financials ETF (NYSE: <a class="ticker" href="/stock/vfh#NYSE">VFH</a>) will certainly be in play.

Blue chip play: Vanguard Value ETF (NYSE: <a class="ticker" href="/stock/vtv#NYSE">VTV</a>).

Emerging markets plays of the day: iShares MSCI Philippines Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/ephe#NYSE">EPHE</a>), PowerShares India Portfolio (NYSE: <a class="ticker" href="/stock/pin#NYSE">PIN</a>) and the Market Vectors Russia Small-Cap ETF (NYSE: <a class="ticker" href="/stock/rsxj#NYSE">RSXJ</a>).

Forex play of the day: PowerShares DB Dollar Bullish (NYSE: <a class="ticker" href="/stock/uup#NYSE">UUP</a>).

Bond play of the day: iShares Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>).

RSXJ

PowerShares DB US Dollar Index Bullish Fund

ETFs to Watch January 15, 2013 (EWG, UUP, VTV)

It is no secret that the Philippines is pushing for an investment-grade credit rating. In fact, and some would say to the country's credit, policymakers there have been overt in their desire to see the country's credit rating boosted. 

In March 2012, the country's chief economic manager said in public that the Philippines is "is the most underrated country in the world" and that the country's current rating is <a href="http://www.benzinga.com/markets/bonds/12/04/2533395/under-the-hood-fun-with-the-philippines#ixzz1zsHTz7wZ">four notches below where it should be</a>.

At least one major global bank has bought into the thesis <a href="http://www.benzinga.com/markets/bonds/12/07/2783306/some-emerging-markets-primed-for-higher-credit-ratings">set forth by Benzinga in mid-2012</a>. That being the Philippines will in fact see an investment-grade credit rating at some point in 2013.

In a new research note, HSBC said it expects the Philippines to land an investment-grade rating in the second half of this year. Additionally, the bank raised its 2012 GDP growth forecast for the Southeast Asian country by 30 basis points to 6.5 percent and its outlook for this year to 5.9 percent, also a 30-basis point increase, <a href="http://blogs.barrons.com/emergingmarketsdaily/?mod=BOL_Nav_DAA_other">Barron's reported</a>.

For now, the HSBC report is having a minimal impact on the iShares MSCI Philippines Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/ephe#NYSE">EPHE</a>). EPHE, one of the best-performing ETFs of any stripe in 2012, is up fractionally Monday on above-average turnover. However, it is worth noting the $240 million ETF is less than 30 cents removed from its all-time high touched earlier this month.

Betting on exactly when the Philippines lands an investment-grade rating could prove tricky. In May 2012, Moody's Investors Service finally got around to raising its outlook to positive on the Philippines. It took Standard &amp; Poor's two months display similar confidence in the Philippines, but the ratings agency did raise <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/07/2723917/debt-free-future-buoys-the-case-for-philippines-etf">its rating on the Philippines long-term foreign currency-denominated debt to BB+ from BB, the highest rating since 2003</a>. That is just one level below investment-grade.

A case can be made that the Philippines is already deserving of an investment-grade and that EPHE's stellar performance over the past year shows investors have started to price in that event before it happens. After all, the Philippines had <a href="http://www.benzinga.com/markets/bonds/12/12/3175050/can-the-philippines-etf-keep-up-its-torrid-pace-in-2013">gross international reserves of almost $82.1 billion in October 2012</a> and a debt-to-GDP ratio of less than 51 percent.

Another reason the Philippines merits serious consideration for an investment-grade rating is the health of its financial services industry. Philippine banks were by far the best performs in Southeast Asia last year, corporate loan demand is robust and <a href="http://www.philstar.com/business/2013/01/02/892332/yearender-phl-lenders-asias-best-performing-bank-stocks">favorable interest rates buoy consumer credit demand</a>. 

Should those themes hold throughout this year, EPHE could continue running higher as the ETF devote over 41 percent of its weight to financial services names.

Investors will also want to consider Philippine bonds in advance of a credit rating upgrade. HSBC favors dollar-denominated issues, Barron's reported. The iShares J.P. Morgan USD Emerging Markets Bond Fund (NYSE: <a class="ticker" href="/stock/emb#NYSE">EMB</a>), the largest ETF tracking dollar-denominated emerging markets sovereign debt, features an almost 6.6 percent weight to the Philippines. 

Investors looking to play Philippine bonds denominated in the local currency, the peso, should consider the WisdomTree Asia Local Debt Fund (NYSE: <a class="ticker" href="/stock/ald#NYSE">ALD</a>), which features an allocation of almost 5.8 percent to the Philippines. The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) features a 10.2 percent weight to the Philippines, but that fund presents some added risk in the form of its <a href="http://www.benzinga.com/markets/bonds/13/01/3225815/no-inauguration-for-chavez-these-etfs-may-be-in-play">large exposure to Venezuelan issues</a>, which have been somewhat volatile in the wake of news reports regarding President Hugo Chavez's failing health.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Barron's

Econ #s

HSBC Hops on Philippines Investment Grade Bandwagon

After the close of U.S. markets Tuesday, Bloomberg reported Venezuelan President Hugo Chavez will not be sworn in on Thursday January 10. The likely reason is his ailing health. Chavez has been in Cuba for several weeks recovering from a fourth procedure to treat cancer. 

Last week, it was reported that <a href="http://www.benzinga.com/markets/bonds/13/01/3213854/chavez-rumors-not-hampering-bond-etfs-yet">Chavez's situation was delicate.</a> One leading physician even said the Venezuelan leader was leading his last days.

Until this week, concerns over the Venezuelan succession plan have not been a hindrance to the country's bonds or the small amount of U.S.-listed ETFs that offer exposure to Venezuelan debt, the only way for most American investors to access the South American OPEC member.

However, on Monday, bonds issued by Petroleos de Venezuela, the country's state-run oil producer, sank on succession fears. PDVSA's debt due 2017 plunged 1.88 cents to 99.09 cents on the dollar yesterday, <a href="http://www.bloomberg.com/news/2013-01-07/pdvsa-bonds-plunge-amid-mounting-concern-about-chavez-succession.html">Bloomberg reported</a>. 

That bond issue is featured in the Market Vectors Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/hyem#NYSE">HYEM</a>), an ETF that features an 8.73 percent weight to Venezuela. Another Petroleos De Venezuela issue, this one maturing in 2014 with a 4.9 percent coupon, is also found among HYEM's top-10 lineup. The ETF eked a positive finish on Tuesday on light volume.

To this point, market participants have seemed resigned to the fact that if Chavez could not be sworn in on January 10, Vice President Nicolas Maduro would assume the presidency. Worth noting is that Venezuela's constitution mandates that new elections must be held within 30 days if Chavez is not sworn in on January 10.

It could be the specter of Maduro, who Chavez has told Venezuelans to vote for if something should happen to him, taking over that has roiled Venezuelan bonds. The iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>), which now features an allocation of almost 17.5 percent to Venezuela, touched a new all-time high early Monday, but sold-off throughout the day and closed lower on Tuesday. 

Over the past five trading days, the Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>), the the only other ETF with noticeable direct Venezuela exposure, is lower by about one percent.

The recent decline in Venezuelan bonds could pressure these ETFs, but the upside is a buying opportunity could emerge on hopes Venezuelans will see Chavez not taking office again as an opportunity to elect a pro-free market regime. 

Venezuela needs to do that because the company's status as an OPEC member belies faltering production and the fact that Petroleos de Venezuela is by many accounts a decrepit company. In 2011, the country had the second-largest oil reserves in the world and reserves could be as high as 316 billion barrels when factoring in the Orinoco Belt, <a href="http://www.eia.gov/countries/cab.cfm?fips=VE">according to the Energy Information Administration</a>. 

Problem is Venezuela's oil is nationalized and Chavez did more to scare Western oil companies operating there than to welcome their much-needed investments and technology. 

Should Venezuela make the transition from leftist regime to some semblance of a free market country, then another ETF becomes an interesting way to profit from that trend: The iShares S&amp;P Global Energy Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixc#NYSE">IXC</a>). 

At least five of IXC's top-10 holdings – Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), Chevron (NYSE: <a class="ticker" href="/stock/cvx#NYSE">CVX</a>), ConocoPhillips (NYSE: <a class="ticker" href="/stock/cop#NYSE">COP</a>), BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>) and Eni (NYSE: <a class="ticker" href="/stock/e#NYSE">E</a>) – have some exposure to Venezuela. That implies a new, non-leftist regime there could be a boon for more than just bonds. It could be good news for some of the most familiar oil stocks as well.

For more on Venezuela and ETFs, click <a href="http://www.benzinga.com/markets/bonds/13/01/3213854/chavez-rumors-not-hampering-bond-etfs-yet">here</a>.

No Inauguration For Chavez; These ETFs May be in Play

News that Venezuelan President Hugo Chavez's health is rapidly deteriorating does not appear to be having an adverse impact on some of the ETFs that offer exposure to Venezuelan bonds. This is a theme worth monitoring because the bond market is the only avenue most Americans have for investing in the South American nation.

Vice President Nicolas Maduro, the presumed successor to Chavez, and other senior Venezuelan recently flew to Cuba where Chavez is attempting to recover from a fourth cancer-related procedure. Maduro has described El Comandante's health as "delicate," <a href="http://www.guardian.co.uk/world/2013/jan/03/venezuela-leaders-gather-hugo-chavez">according to London's Guardian newspaper</a>. 

The Telegraph reported a situation more dire. Citing a well-known Venezuelan physician, the Telegraph reports <a href="http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/9778310/Hugo-Chavez-living-his-last-days.html">the last procedure on Chavez was a failure and the president is living his last days</a>.

As was the case in <a href="http://www.benzinga.com/markets/bonds/12/12/3164041/etfs-with-venezuela-exposure-mixed-on-chavez-cancer-news">December when Chavez first arrived in Cuba</a>, ETFs with exposure to Venezuelan debt are mixed on the most recent batch of headlines.

During Thursday trading, the Market Vectors Emerging Markets High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/hyem#NYSE">HYEM</a>), on light volume, touched a new all-time high and settled just a penny below that new high. HYEM, which tracks emerging markets corporate debt, features a weight of 8.73 percent to Venezuela. Not to mention, the ETF's largest holding is an issue from Petroleos De Venezuela, the country's state-run oil company, maturing in 2017 with a coupon of 8.5 percent. Another Petroleos De Venezuela issue, this one maturing in 2014 with a 4.9 percent coupon, is also found among HYEM's top-10 lineup.

Also on light volume, the iShares Emerging Markets High Yield Bond Fund (NYSE: <a class="ticker" href="/stock/emhy#NYSE">EMHY</a>) touched a new all-time high on Thursday. EMHY, which debuted in April 2012 and already has close to $200 million in assets under management, is the ETF with the largest Venezuela exposure. South America's largest oil producer accounts for 15.21 percent of EMHY's country weight, putting it just behind the 15.3 percent the ETF devotes to Turkey.

One explanation for the bullish performances of EMHY and HYEM in the face of negative news about Chavez's health is that Venezuela alone is not the primary driver of performance -– in either direction –- for these ETFs.

Another possible explanation is that traders know that even if Chavez passes away and Maduro becomes president, a highly probable scenario, Venezuela's constitution mandates that new elections must be held within 30 days if Chavez is not sworn in on January 10. That could open the door for Venezuelans, assuming the elections are truly democratic, to elect a more free-market, pro-business regime. If that happens, Venezuela's economy could be on a path to becoming more like Peru's or that of neighboring Colombia.

All of that is speculation until Chavez's health dramatically improves or he passes away. Interestingly, one ETF with Venezuela exposure did not get in on the good times on Thursday. The Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>), which features a 9.53 percent allocation to Venezuela, slid almost one percent on volume that was more than double the daily average. 

For more on Venezuela and ETFs, click <a href="http://www.benzinga.com/markets/bonds/12/12/3164041/etfs-with-venezuela-exposure-mixed-on-chavez-cancer-news">here</a>.