NEW YORK ( TheStreet) -- The Pimco Emerging Markets Bond Fund ( PEMDX) beats two emerging market exchange-traded bond funds -- JPMorgan USD Emerging Market Bond Fund ( EMB) and PowerShares Emerging Markets Sovereign Debt Portfolio ( PCY), in a head-to-head comparison.

All eyes remain on Europe, with hopes that some sort of solution to Greece's debt problems can be reached. In response to Greece's ongoing woes, investors grow wary of debt hysteria spreading to other European countries, America, or Japan.

According to the CEO of Pimco's Asia division, Brian Baker, bond investors should look to countries in the Asia-Pacific region as an alternative to American and European government debt markets.

Baker also said that, in general, emerging markets will be less at risk of making policy mistakes when it comes time to reduce government economic stimulus measures. If he's right, exposure in emerging markets outside of the Asia-Pacific region shouldn't hold back these funds.

Bond giant Pimco highlights four Asia-Pacific countries that it considers to offer the best bond investment opportunities. These are Australia, the Philippines, South Korea, and Indonesia.

Since Australia isn't an emerging market, it doesn't receive an allocation in EMB or PCY. However, PCY does allocate 12.7% of net assets to the other three countries while EMB allocates 10.4% to just the Philippines and Indonesia.

Investors that are interested in international bonds also have a better option in the form of PEMDX. The fund has exposure to similar countries as EMB and PCY, but it allocates 16% to the Philippines and Indonesia.

Comparing the ETFs and the mutual fund reveals that EMB has an expense ratio of 0.6%, PCY has an expense ratio of 0.5%, and PEMDX has an expense ratio of 1.3%. There is also a $2,500 investment minimum for the mutual fund.

Year to date, EMB and PCY have risen by 3.6% and 4.6%, respectively, while PEMDX has gone up by 4.2%. However, in the past year, EMB has gone up by 29.1% while PCY has increased by 31.2% and PEMDX has seen gains of 34.4%.

In the short term, the actively managed mutual fund was able to keep pace with its ETF peers. Over the course of the past year, PEMDX was better able to take advantage of the volatile market environment.

Considering that investing in bonds outside of Europe and the Americas is a way of hedging against a potentially volatile double-dip caused by unsound fiscal policies in the western world, the mutual fund may be the better bet here. Investors that don't plan on monitoring their investments closely can find comfort in knowing there is someone at the helm of the fund in the event of economic volatility. For these types of investors, it will be worth the higher fees to purchase the mutual fund, while more short-term bond traders can go with either EMB or PCY.

Nobody is yet certain what will be the next country to be thrown into turmoil by government debt problems after Greece. However, speculation abounds and most point to Europe or America as the source of the next wave of debt concerns. Investors that want to gain exposure to bonds in more fiscally sound countries, especially as western economies will need to pull the plug on stimulus over the course of this year, should turn to PEMDX.

--Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion had no positions in the securities mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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